The global economy was once again reminded of the risks that external headwinds can pose for domestic markets today, after the growth target for China in 2019 was estimated at a lower range when compared to 2017 and 2018.
China’s Premier Li Keqiang announced that China is targeting an economic growth range between 6 – 6.5% this year, and there was a warning from externally-generated risks that the subsequent pressure this may have on the Chinese economy is increasing.
This warning around externally-generated risks and headwinds follows a narrative that has been echoed across the world in recent weeks and months, including major institutions like the IMF and a range of central banks across the major and developing economies.
The external headwinds are not limited to one individual factor by any means; they include a range of unconventional risks that are noted more regularly in politics, prolonged uncertainty around issues like Brexit and a list of other unknown events. While we have seen very regularly what impact risk aversion can have on financial markets, in terms of investor reluctance to take on “risk” in stock markets and emerging market currencies in recent months – we are yet to notice the full impact these external headwinds are having on the global economy. I expect that this trend will change over the coming weeks and months, meaning we will begin to gain a clearer indication on what impact external headwinds are having on economic data.
