However, Fatás acknowledges the picture is not so rosy elsewhere. Addressing US President Donald Trump’s threat of across-the-board tariffs, Fatás warns of a global trade slowdown “that’s going to have much larger consequences” than the seven-year-old trade war between the US and China.
Fatás is also pessimistic about Europe’s ability to mobilise the resources and investments it needs to overcome its current economic challenges, driven by the region’s low productivity combined with an ageing and shrinking population. The EU will need to have “very complex and deep conversations about priorities”, he says, whether it’s pensions or investment in defence and technology.
These issues could be exacerbated by the weakening of institutions, the rule of law and democracy in several countries as a result of geopolitics. This will be “bad news” for long-term growth, even if the effects won’t be immediately apparent.
Other specific risks outlined by Fatás include China’s dual challenges of deflation and high debt levels, and a stock market where a correction is long overdue.
