• Foreign Affairs
  • Money Matters
  • Domestic Affairs
  • IT, Innovation and Startups
 

Talk Finance

£$$€№₮IAL €¢¤₦¤MI¢ №€₩$
  • Foreign Affairs
  • Money Matters
  • Domestic Affairs
  • IT, Innovation and Startups

Talk Finance

  • Foreign Affairs
  • Money Matters
  • Domestic Affairs
  • IT, Innovation and Startups

In Money Matters

IMF view of the future comes from the fears of the present

1st February 2019

IMF view of the future comes from the fears of the present Pin It

Actually the reports of the IMF on the outlook for the global economy are useless. It happens because nobody knows what exactly the future will bring. But they do provide a picture of the current consensus in the market. A reflection of our fears and wishes.

The new IMF chief economist Gita Gopinath concluded in the report that global growth is faltering. The slowing is surprising and Gopinath spent the necessary words on the risks attached to the outlook. These risks are not so much economic or financial, but mainly political. Business tensions, Italian politics, Brexit and the shutdown of the American government were all cited by them as potential sources that could further weaken the economy.

The unknown unknowns

How these risks will develop in the coming months, nobody knows. And does the stock market give the investor sufficient compensation to take on these risks? In itself, it is encouraging if market players focus on the ‘worst-case scenarios’ of cases with a double unknown: the unknown outcome and the unknown influence of that outcome on the financial system.

What we do know is that since the beginning of 2018 the MSCI All Country World Index has increased by 1.5% to 7.5%. The risks that the IMF is talking about are already included in the prices. Investors are served with a theoretical plus of 1.5%. In some markets, such as Japanese, we get 2.5% more than a year ago and the cheapest valuations since halfway through the euro crisis.

Recovery is still possible

IMF president Christine Lagarde waved a warning finger towards political bodies. She told them to put things in order, show themselves resiliently, embrace an inclusive society and increase cross-border cooperation. If they actually do this, there will be more recovery for the equity markets, more than we have seen in January. The sentiment that now prevails is not yet supported by the underlying developments that suggest a structural slowdown in growth: many labor markets are still becoming stronger and inflation expectations are favourable.

This can of course worsen, but we are still more than compensated for the risks, also in parts of the bond market. Should the uncertainty surrounding political problems weaken, a more positive sentiment could boost returns.

The IMF has no influence on this with all its well-intended predictions.

Share

No Comments

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Post

Shell and Pension Fund…

In Money Matters

Shell and Pension Fund will unite to bid the Endeavor

View Post

Next Post

American Stock Exchange is in…

In Money Matters

American Stock Exchange is in a good mood

View Post

In Foreign Affairs

5,000 Hong Kong residents signed for British papers

View Post

In Money Matters

British retail is hit harder than was expected

View Post

In Money Matters

EasyJet wants to make COVID-19 test for the crew mandatory

View Post

Boris Johnson

In Domestic Affairs

Boris Johnson comes with the long roadmap from the lockdown

View Post

Newsletter

Latest News

View

EU zone economic confidence reaches 93.4 with the reasons for euphoria still to uncover

25th February 2021

View

Moody’s expects lower bounceback for Eurozone and Britain

24th February 2021

Boris Johnson

View

Boris Johnson comes with the long roadmap from the lockdown

23rd February 2021

View

EasyJet wants to make COVID-19 test for the crew mandatory

22nd February 2021

Allow us to introduce ourselves

Talk-Finance.co.uk, the analytic media. We are focused on the fresh business, M&A and financial data. We pay attention to the interesting new projects and startups while not letting the whole picture to let unnoticed.

  • Investing.com
  • Runch.co.uk

Sign Up for Our Newsletter

Our friendly crew

  • Matthew Patridge, the chief Editor
  • Chris Kimble, the managing Editor
  • Matthew Weller, webmaster&technical stuff
  • Charles Sizemore, author
  • David Stevenson, author
  • Helen Rush, author

Contact us by [email protected]

© 2019 Talk Finance - All Rights Reserved. [email protected]