Business confidence high across global economies; outlook cautious May 17, 2018 The American Financial Services Association (AFSA) held its 28th annual Credit Summit for Fixed Income Investors today in Midtown Manhattan, in close proximity to the offices of many of the 170 attendees. Ebrahim Rahbari, Managing Director and Head of the Global Macroeconomics at Citi Research in New York, and a frequent guest on Bloomberg Radio, gave an expansive overview of factors driving the global and U.S. economy. Globally, he said the economy looks good and solid, but that its growth may have peaked last year at 3.5% to 4.0%. “The global economy is in pretty good shape, but indications are that we are approaching the final stages of the cycle,” he said. “Our takeaway is that we are cautious but not pessimistic.” He said the potential for “trade wars” between the United States and other countries was a concern for the future, but not a “trigger for a downturn” in the global economy. “Business confidence across global markets is running high,” he said. Rahbari stated that the Federal Reserve is on pace to raise interest rates three times this year, on a quarterly basis, but that he sees the U.S. maintaining an annual growth rate of 2.5% to 3% despite the Fed rate increase, while the global economy would have a 3% growth rate for the year. His research team’s assessment of the Trump Administration’s approach to U.S. trade policy is that it: wants to protect American jobs and manufacturing; equates economic security with national security; seeks fair trade by renegotiating NAFTA (North American Free Trade Agreement) and KORUS, the trade agreement between South Korea and the U.S. Additionally, the Administration seeks to reduce the trade deficit and carry out a strict enforcement of trade policies. “This administration has ramped up activity and doubled the enforcement action (on trade agreements) from the previous administration,” Rahbari said. He said a “NAFTA 2.0 agreement” may be announced in the next week or two, but that a timeline of finalizing the agreement by the end of the year would be difficult, especially with upcoming elections in Mexico and the U.S. 2018 Midterm elections.