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IMF brings out the knife again

Published Wednesday, January 20th, 2016

The IMF has taken out the knife yet again in its latest World Economic Outlook. It is death by a thousand cuts and there is not much flesh left on the bone before the key 3% global growth rate is breached. The forecast for this year is cut to 3.4%, the US is cut to 2.6%, China is kept at 6.3% (6% in 2017!), the eurozone marginally improves to 1.7% and the dunce award goes to Brazil which is reduced by 2.5% to -3.5%.

We also learnt yesterday that a survey of 1400 CEOs in 83 countries by PWC in preparation for this week’s World Economic Forum in Davos shows a big fall in confidence about near-term sales growth. Only 35% are confident about sales growth in the 12 months compared to 39% a year ago, the lowest reading for 6 years. Only 27% expect an improvement in global economic growth compared to 37% a year ago. The shocker is that the survey was undertaken in 4Q – where have they been hiding these opinions?

What is there to feel upbeat about? Not China, emerging markets, the eurozone, Japan, the Middle East, geopolitical goodwill, the war on terrorism, inflation, currency stability, employment levels or corporate profitability. You might feel positive towards the US and India but the US recovery is highly problematic and entering an election year that is going to blow our minds in terms of divisiveness. The US may be the greatest power in the world but it is not the greatest democracy.

to read the rest of the report, please click here

Posted by David Hufton