IMF report warns that global economic risks are ’tilted to the downside’
The first day of the 2019 Spring Meetings of the World Bank Group and the International Monetary Fund will kick off today in Washington, D.C.
Economists worldwide are concerned about the prospect of a global slowdown of economic growth. Since January, the IMF has cut its global growth forecast for 2019 from 3.7% to 3.3%. IMF Managing Director Christine Lagarde has said that the global economy is “unsettled” after two years of steady growth. She also labelled the current outlook “precarious”, given vulnerabilities to negative market shock consequences resulting from trade tensions and Brexit.
Fears of a slowdown are backed by decent evidence, as a number of possible events in the near future could trigger turbulence. For example, although unlikely, a more aggressive future approach to raising interest rates in leading industrial countries could risk a collapse in share prices.
Likewise, an escalation of global trade tensions or a no-deal “crash” Brexit may unfavourably affect market sentiment, making investors more risk averse. Indeed, the IMF recently released a report making the case that asymmetric trade obstacles, like tariffs or a no-deal Brexit, may lead to the future distortion of international trade relationships, especially for large trading partners.
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