‘A Delicate Moment’: IMF Laments Slowest Pace Of Global Growth In A Decade

In light of the daily deluge of data market participants are subjected to and considering the real-time recessionary mood indicator that is the DM bond market, it’s not clear that “official” pronouncements from the likes of the IMF are even notable anymore, but on the off chance anybody cares, the Fund slashed its forecast for global growth in 2019 to just 3.3% on Tuesday.

That represents the most dour outlook since the crisis. It’s also a more pessimistic take than the Fund delivered just three months ago (the forecast was 3.5% in January). This is the third time the Fund has slashed its outlook in the space of six months.

“The escalation of US—China trade tensions, needed credit tightening in China, macroeconomic stress in Argentina and Turkey, disruptions to the auto sector in Germany, and financial tightening alongside the normalization of monetary policy in the larger advanced economies have all contributed to a significantly weakened global expansion, especially in the second half of 2018”, the IMF wrote Tuesday, introducing their updated outlook. The Fund says growth will slow in 2019 for 70% of the world economy.

The downwardly revised aggregative growth projection “reflects negative revisions for several major economies including the euro area, Latin America, the United States, the United Kingdom, Canada, and Australia”, the IMF laments, adding that while improvements in financial markets have been swift in the new year on the back of the vaunted dovish pivot from monetary policymakers, “those in the real economy have been slow to materialize [with] measures of industrial production and investment remaining weak for now in many advanced and emerging market economies.”

Global trade, the IMF warns, “has yet to recover.”

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Trade-Offs.

They do project an improvement starting in the second half of this year, a debatable prospect that will almost surely elicit jeers from those who see a US recession materializing in 2020. If Trump’s latest tariff broadside is any indication, trade tensions aren’t set to abate entirely anytime soon.

Long story short, the IMF acknowledges the risks, calling this a “delicate moment” and citing the following possible stumbling blocks:

While the global economy continues to grow at a reasonable rate and a global recession is not in the baseline projections, there are many downside risks. Tensions in trade policy could flare up again and play out in other areas (such as the auto industry), with large disruptions to global supply chains. Growth in systemic economies such as the euro area and China may surprise on the downside, and the risks surrounding Brexit remain heightened. A deterioration in market sentiment could rapidly tighten financing conditions in an environment of large private and public sector debt in many countries, including sovereign-bank doom loop risks.

Here’s the country-by-country breakdown:

There’s not a lot that’s “new” here for anyone who’s been following along, but for those interested, the full report (all 216 pages of it) is embedded below.