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Willem Verhagen Authored by Willem Verhagen, Senior Economist, Macro & Strategy at NN Investment Partners.

Global economic growth in recent years has been fairly stable at a level clearly below that of expansion periods before the global financial crisis, when both nominal and real growth were substantially higher on average. Today, growth is better-positioned to break out on the upside than at any time since the crisis, but whether this will happen is far from certain, and will mainly depend on productivity growth and geopolitical tensions.

NN Investment Partners (NN IP) sees two future economic scenarios: Scenario 1 is global growth breaking above the 3.5% level that has marked its ceiling over the last six years; Scenario 2 is a continuation of a range-bound economy in which the economy remains within a certain limited bandwidth.

"Scenario 1 of higher growth will only happen if productivity growth moves sustainably higher," Willem Verhagen explains. "In such a world, core government bond yields would gradually rise towards levels much higher than today. If growth accelerates, perhaps because of strengthened consumer and business confidence and higher spending, it would initially be unlikely to lead to a big acceleration in monetary tightening if inflation remained below target. Over time, it would lead to more interest rate hikes, but these would be positive because they would happen amid faster growth."

"Monetary policy normalisation in the US and the reduction in ......................

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