Tags: imf | world | economy | surprises

IMF: World Economy's Malaise May Mask Upside Surprises

IMF: World Economy's Malaise May Mask Upside Surprises
(Diana Ivanova/Dreamstime)

Thursday, 17 October 2019 05:10 PM

The downbeat story for the world economy is well understood. But could there be upside surprises?

That question swirled among economists during a panel discussion on the sidelines of the International Monetary Fund meetings in Washington Thursday. There was consensus that a cooling of U.S. and China trade tensions and a possible deal on Brexit will boost sentiment.

But there are other strengths too. Historically tight labor markets, rising wages and the potential for inflation are putting a floor under weakening demand, Catherine Mann, global chief economist with Citigroup Inc., told the panel.

“Throughout this entire year, markets have underestimated the strength of domestic resilience,” she said.

Heather Hagerty of Fidelity Investments pointed to the policy front, where central banks have shifted to easing from raising interest rates. “I feel a lot better than even a year ago when they were headed in the opposite direction,” she said.

The award for blue-sky thinking went to Paul Gruenwald, chief global economist at S&P Global Ratings, who argued that a push for spending on initiatives related to a cleaner environment including green finance and ESG. That’s a potential new growth engine, he said.

Other key themes emerging at the IMF and World Bank meetings included cries for more government spending to support growth and the potential impact of the U.K.’s divorce from the European Union -- with a possible Brexit agreement on the horizon.

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The downbeat story for the world economy is well understood. But could there be upside surprises?
imf, world, economy, surprises
232
2019-10-17
Thursday, 17 October 2019 05:10 PM
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