On Tuesday of this week the IMF released its “World Economic Outlook” report. It reflected a cautious outlook for the global economy through next year. They also blame policy makers for the rapid deterioration in the outlook for global economic growth prospects. “Policy indecision has exacerbated uncertainty and added to financial strains, feeding back into the real economy.” They also identified four reasons there is increased downside risk: (1) weak sovereigns and banks in a number of advanced economies (2) insufficiently strong policies to address the legacy of the crisis in the major advanced economies (3) vulnerabilities in a number of emerging economies (4)
volatile commodity prices and geopolitical tensions The recent downdraft in commodity prices also points to a slowdown in global growth. Falling commodity prices generally presage a drop in equity prices as well. We concur that there will likely be continued weakness until there is concrete evidence that policy makers are willing to take decisive actions to adopt a fiscally responsible, pro-growth agenda.
