The U.S. economy will disappoint investors by expanding at a rate of 1.75% over the next year, said Ramin Toloui of Pacific Investment Management Co. (PIMCO), which runs the world’s biggest bond fund.
The risks are skewed toward even slower growth, Toloui, an emerging markets portfolio manager, said on a conference call and reported by Bloomberg. Growth will fall short of the consensus forecast, which is 2.6% for the year ahead, according to PIMCO. Investors should add to their emerging-market holdings, Toloui said.
“We’re still seeing a tentativeness in the financial sector to take risk” in the U.S., said Toloui, speaking from PIMCO’s head office in Newport Beach, Calif. “The overall alignment of facts point toward a much more cautious conclusion about the trajectory of the U.S. economy.”
Bloomberg noted Toloui spoke as Federal Reserve officials debated whether to increase the central bank’s Treasury purchases to stimulate the economy. Bloomberg said China raised borrowing costs on Tuesday for the first time since 2007, sparking speculation the decision would slow one of the engines of the global economic expansion.