BCA Research finds that the global economy is set to decelerate on the back of a modest cooling in China and a slowdown in the U.S.

“Robust U.S. consumption and booming Chinese investment have fueled the global economic recovery in recent years. However, both economies are in the process of slowing,” BCA says in a research note.

“The U.S. consumer finally shows signs of flagging as the tailwind from housing fades, while Chinese policymakers are trying to tame runaway investment spending and real estate speculation,” it explains.

“The two economies have accounted for nearly half of world GDP growth in the past five years and represent more than one-third of output, so their slowdowns will reverberate widely,” BCA adds. “More positively, China’s cooling will be only marginal and the U.S. should experience a soft landing, meaning global growth is merely downshifting rather than heading for a slump. Still, growth-sensitive asset prices will likely feel the fallout.”