If the headlines coming out of the Davos annual summit are anything to go by, the world economy may be heading for a period of gloom and doom. The IMF recently joined the World Bank and OECD to lower its global growth forecast citing multiple reasons for pessimism. The news comes close on the heels of China’s 2018 GDP numbers which indicate the Asian economic giant grew at the weakest pace in nearly three decades.
Economists have identified U.S.-China trade spat, the possibility of a no-deal Brexit, and public and private debt as some of the key dangers to global economic growth. Given that none of these macro-economic issues have quick fixes, investors would do well to expect a period of uncertainty and turn their attention to sectors that are relatively immune from negative news cycles and economic malaise.
One such sector is consumer staples, or consumer defensive. The sector comprises non-cyclical and stable businesses like food, retail, and beverages, that tend to do relatively well through challenging economic conditions. Consumer staples companies make products that are considered essential goods which helps these businesses weather economic upheavals and market volatility.
