T. Rowe Price expects a slight improvement in the global economic environment in 2017 helped by the growth rebound in the U.S., Canada, Brazil and Russia – but deleveraging and restructuring headwinds persist.

“Economic growth has improved in the second half of 2016 as the impact of the commodity price plunge fades,” according to Alan Levenson, chief U.S. economist at T. Rowe Price.

Levenson says the U.S. expansion, which is in transition from midstage to late-stage, still has room to run.

“U.S. expansion could go another three years,” Levenson said at T. Rowe Price’s global market outlook press briefing held in mid-November in New York City.Near-term recession risk is low. The big takeaway here is pre-crisis growth was a lot stronger than post-crisis growth.”

And, while global growth quickened at midyear, post-crisis headwinds could limit the recovery.

According to Levenson, deleveraging has taken divergent paths. Within developed markets, the U.S. and the U.K. trend lower, and the rest of the developed markets, excluding Japan, trend sideways or higher.

By contrast, China and several other emerging market economies have witnessed a post-financial crisis debt surge, with China’s debt currently representing more than 200% of gross domestic product. China is not alone; South Korea’s debt is nearing 200% of GDP as well, and both Chile and Malaysia’s debt loads have surpassed 125% of GDP.

Looking at global inflation, Levenson finds that emerging markets are following developed markets lower.

According to Levenson’s outlook, developed market inflation remains broadly below central bank targets, and emerging market inflation will follow developed markets lower as currencies stabilize.

There’s also uncertainty and unpredictability surrounding the impending Trump presidency that could negatively impact U.S. and global financial markets.

In Levenson’s view, it’s too early to change the point estimate for 2017 growth in the U.S.

“I’m awaiting clarity as to President-elect Trump’s program once he’s elected,” he said at the press briefing.

Among Trump’s campaign proposals were indications for both positive and negative growth.

Proposals like corporate tax cuts, looser regulations and increased federal outlays for defense and infrastructure could provide a “marginal fiscal stimulus” for the U.S. economy in the short term, according to Levenson.

“Both President-elect Trump and the Congress want to reform taxes… [and] the notion that we might get fiscal spending on infrastructure would all be positives for growth,” Levenson said during the press briefing. “On the negative side are movements to restrict trade and immigration. I’ll be watching closely to see how this shakes out.”

In a T. Rowe Price post-election analysis, Levenson stressed his concern about the president-elect’s protectionism because Trump has fairly extensive unilateral executive authority to take action against trade partners.

“Trump’s trade threats — to Mexico and China — may be no more than opening ploys to secure concessions,” Levenson said in the analysis. “But the risks of miscalculation are high and could lead to very damaging trade wars — which could have a negative impact across the U.S. economy, not just those areas directly linked to international trade. I am not aware of any country in history that ever isolated its way to prosperity.”

Also potentially negative for the U.S. economy is Trump’s promised immigration crackdown, according to Levenson.

“If we slow immigration of working-age adults, there’s not enough growth in the rest of the U.S. workforce or the overall productivity rate to grow the economy very fast,” he says in the analysis. “Most of our net population growth comes from immigration.”

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