Speaking at the SteelOrbis 2017 Fall Conference & 77th IREPAS Meeting held in Athens on September 24-26, Vassilis Patikis, head of economic research and investment strategy at Piraeus Bank, said that we are probably past peak globalization, adding that the US is still the world’s biggest consumer, while the US economy’s capacity for growth seems downgraded. The US economy remains in a stage of economic growth. Although recent data has been somewhat disappointing, Mr. Patikis said that he considers these deviations, both in terms of growth and inflation, to be temporary.
However, Mr. Patikis said that leading indicators signal a strong growth of around 2.5 percent in 2018, though warning that the leading indicators could exaggerate growth and are possibly still affected, initially by Trump’s promises and then by the weak US dollar. He also added that the inflation rate in the US is currently too low and is unlikely to exceed two percent before 2020. He went on to indicate that, as long as markets “accept” it, the US FED will seek to normalize interest rates but hikes based on pre-2007 growth expectations are not sustainable.
Accelerating trends are also seen in the Chinese economy, where a rate above 6.5 percent may be achieved. Mr. Patikis said that a stronger Renminbi makes US-Chinese trade relations easier and also helps to shift the Chinese economy towards consumption, while the US economy leans towards investment.
According to the Piraeus Bank official, the euro zone economy is on a path of robust growth of around two percent for 2018, which is based more on domestic demand rather than on exports. Relief from the political risks of the previous year continues to be a positive factor, supporting investment and consumer confidence. He said that the euro zone is exiting a double-dip recession and a deflation scare, and so the momentum could be more durable compared to the US at this stage, though with politics and the possibility of disintegration of the EU’s Economic and Monetary Union (EMU) remaining key long-term risks.