Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, said: “Elections, trade tensions and a shifting monetary and fiscal policy mix are likely to define a ‘year of choices’ in 2020. However, investors should also look beyond the next 12 months to a ‘decade of transformation’ where new winners and losers could change how investors allocate capital.”
Ali Janoudi, Head Central and Eastern Europe, the Middle East and Africa at UBS Global Wealth Management, said: "The impact of trade tensions on investment, the slowdown in the Eurozone, and a more challenging backdrop for the energy market remain major risks particularly for Central and Eastern Europe, and oil-driven economies in the larger region. However, on the upside, the scores of CEEMEA countries in global competitiveness and ease-of-doing-business rankings reveal that much progress has been made in recent years, even though more work needs to be done to attract and maintain human talent and capital."
On the prospects for the UAE, Niels Zilkens, Lead Market Head Arabian Gulf & NRI said: "The UAE economy is on a slow recovery path from the 2014–2017 oil shock, and significant fiscal buffers remain in place. Headwinds will persist this year and next due to lingering trade tensions, the global economic slowdown, low energy prices, OPEC-led production cuts, and tensions with Iran. Growth should, however, pick up somewhat thanks to the ongoing fiscal stimulus measures, spending related to hosting Dubai Expo 2020, rate cuts in line with the Federal Reserve, and continuing diversification efforts.
Over the 2020s, investors will also face a world transformed. Some 790 million people will move to cities. Workforces will shrink by 25 million in the developed world and grow by 470 million in the emerging world. The number of internet users will rise from 4.3 billion to 7.5 billion.
Sustainability and technology challenges related to these and other factors present opportunities, according to the report. Overall, the top longer-term investment themes highlighted in the Year Ahead report are digital transformation, genetic therapies, and water scarcity.
Furthermore, as 2020 approaches, investors are rallying around global standards that will make sustainable investments in particular more approachable for clients. These include the International Finance Corporation’s Operating Principles for Impact Management, as well as the International Institute for Finance’s efforts to simplify sustainable investing terminology. The latter are supported by both the world's largest global wealth manager, UBS, and the world’s largest asset manager, BlackRock.
In UBS GWM's base case, the global economy will grow 3% in 2020, down slightly from 3.1% in 2019, according to the report. Developed market growth will decelerate from 1.6% to 1.1%, while emerging market growth will accelerate from 4.2% to 4.6%. However, two-way uncertainty is high, driven by choices in geopolitics and policymaking, as well as at the ballot box.
The world will also probably keep a lid on inflation, with global inflation decreasing from 3% to 2.9%. The yield on 10-year US Treasuries will decline to 1.8% by the end of 2020, while Brent crude oil prices will decline to USD 60 a barrel.
In its base case for 2020, UBS GWM forecasts growth of:
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© Press Release 2019