Morgan Stanley expects an above consensus 3.8 percent global growth in 2018 led by a pick-up in the capital expenditure cycle in both developed and emerging markets.
There is already evidence of a pick-up in the developed markets, Chetan Ahya, chief Asia economist and co-head of global economics at Morgan Stanley, told Bloomberg in an interview. Emerging markets should see a recovery in their capex cycle in 2018, he added.
Sustained pick up in exports growth coupled with improved machinery and equipment capital expenditure will strengthen the growth story in Asia and help sustain growth. Morgan Stanley's base case is that global growth will hold up "stronger for longer"
Listing the factors that could derail the synchronised growth, Ahya said, the risks are essentially in the two of the largest economies. "In the U.S. we are watching the corporate credit risks and therefore the implications of that on overall growth, and in case of China, they are taking up tightening but it is never easy to deleverage."
The pace of tightening in China is unlikely to be big enough to cause a meaningful slowdown, he added.
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