Vanguard economist predicts global growth, modest returns

Canada will benefit from U.S. resilience, says Joseph Davis.

Michael Ryval 26 January, 2017 | 6:00PM

Global economies will grow at a reasonable pace in 2017, while markets will only deliver modest returns as a state of "sustained fragility" will be the norm, says Joseph Davis, global chief economist for Vanguard Group Inc.

"Thematically, this year is a matter of stabilization for the global economy -- not stagnation," says Davis. "Markets are increasingly appreciating that the world is not heading for Japanese-style stagnation and it's one of the reasons we have seen strong financial-market performance over the past six months. That's welcome."

It is unlikely, however, that markets in major economies will accelerate, adds Davis, and recession appears to be remote. "Financial markets are anticipating growth in the U.S. north of 3%. Investors are sometimes presented with dichotomies and paradoxes. You can see a modest strengthening in global economies and yet you can have a year of modest investment performance. That all relates back to two things: one is, what is already priced into the market?" says Davis, global head of the Vanguard investment strategy group.

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Michael Ryval

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