Pimco's El-Erian outlines ‘new normal' scenarios

CEO's baseline scenario is muted economic growth with muddled policy response

Pimco’s Mohamed El-Erian has identified four potential scenarios for the pattern of economic growth over the next few years, supporting the group’s idea of the “new normal.” The firm’s chief executive officer says the baseline scenario is muted economic growth combined with a muddled policy response. “We think there is about 60% possibility of this happening,” he says. El-Erian attributes a 10% to 15% chance of the three other scenarios emerging. These include governments taking a purely national policy focus, leading to protectionism and even lower global growth as well as an ‘imm...