At the turn of year, many organizations forecast what the economy will look like and thus affect policy decisions throughout the year. In an article by Leika Kihara and Silvia Aloisi of Reuters reported the IMF or International Monetary Fund cuts its world economic growth forecasts for 2019. The year 2020 may not be much better. Part of the reason is China’s growth is slowing, no one really knows how much, but there are signs it is slowing. In addition Brexit does not help growth as what happens to the UK?
After 2 years of solid expansion, the world economy is growing more slowly than expected and risks are rising, IMF managing director Christine Lagarde said. It does not mean a recession, but expected slowdowns. Expect trade tensions, rising US interest rates, dollar appreciation, capital outflows and volatile oil prices to continue to make the news and affect risks.
Linking to dividend paying stocks, whenever there is a slowdown of economic growth, there is a flight towards the consistently profitable stocks which pay dividends. The classic example is an utility – as long as people use electricity and pay their bills, the utility will highly likely earn a profit and pay dividends. There are other companies which have a near monopoly, do your homework, and when the stock price is down buy them as prices return to normal.
There are more questions than answers, till the next time – to raising questions.