Economic Reports.

For New Zealand, our economy has been supported by the tailwinds of record-high Terms of Trade, low interest rates and strong population growth. Nonetheless, business confidence remains weak and points to an upcoming slowdown in growth led by a fall in business investment.

Despite a tumultuous month for equity markets, the current period of steady expansion of the global economy continues. The expansion, however, has become less balanced and may have peaked in some major economies.

The global growth remains strong as major developed economies continue in mature stages of their economic cycle.

Investment returns have been strong for a considerable period and we continue to recommend that a balanced approach to investment be maintained.

The world economy remains strong and the near-term outlook is fairly bright, despite the recent escalation in trade tensions. Global growth is robust as major economies continue in mature phases of an extended economic expansion.

The near-term outlook for the world economy is still positive, however, mounting tensions over a potential US-China trade war suggests an elevated risk to the medium term outlook.

Generally, the month of May was consistent with the 2018 story of a global economy entering a mature stage characterised by market volatility, the gradual emergence of inflation, higher interest rates (primarily in the US) and a softening of global economic growth indicators.

Looking ahead, global markets face a more balanced set of tailwinds and headwinds than was the case a year ago.

While the sudden increase in market volatility in February raises concerns, we do not believe that the bull market in equities has yet come to an end.

Aside from the February turbulence in equity markets, global economic growth should hold up well and inflation should remain low in 2018.