Vanguard's global outlook for 2020: The new age of uncertainty

16 December 2019 | Markets and economy


Vanguard economists see slowing global growth and elevated uncertainty creating a fragile backdrop for the markets in 2020 and beyond.

The slowdown in global growth described in last year’s Vanguard Economic and Market Outlook was accentuated in 2019 by a deterioration in the global industrial cycle. A broad escalation of policy uncertainty, especially tensions between the U.S. and China, has largely driven this downturn through postponed investments and declines in production.

Our outlook in brief:

  • Global growth: It’s likely to stay lower for longer as we do not anticipate a significant reversal of the tariff escalation or a meaningful resolution to broader trade and geopolitical tensions.
  • Inflation: Across much of the developed world, inflation is likely to remain below central bank targets. Persistent structural factors have been pushing down some prices while inflation expectations have fallen short of most policy targets, implying increasing doubts about the effectiveness of monetary policy.
  • The financial markets: We expect returns over the next decade to be modest at best. While our equity outlook has improved, owing to mildly more favorable valuations, the chance of a large drawdown in the near term remains elevated. We expect fixed income returns to be lower given the decline we’ve seen in yields over the past year, but high-quality bonds will remain a key portfolio diversifier.

 Read the full report to learn more about our global economic outlook, inflation, monetary policy, and the implications for investors.

Important information:

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject to interest rate, credit, and inflation risk. International investing is subject to additional risks, including the possibility that returns will be hurt by a decline in the value of foreign currencies or by unfavorable developments in a particular country or region.