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Thursday, September 18, 2014 1:26 AM

"Precarious" Global Economy

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It's not often I agree with the IMF on anything, but this time I do. The Global Recovery is Precarious, says International Monetary Fund.

The International Monetary Fund has warned that the global recovery is on precarious footing, as rising geopolitical tensions and the prospect of tighter monetary policy in the US risk dampening the outlook for global growth.

In a document prepared ahead of this week’s G20 meeting of finance ministers and central bank governors in Australia, the IMF said that growth in the first half of this year was weaker than it had predicted in April. The Fund signalled it is likely to cut its next batch of forecasts which will be released in October.

The Fund’s assessment is the latest sign that mounting tensions in Ukraine and the Middle East have worsened the prospects for the global economy.
Headline Agreement

I need to pause right there, with the obvious, because the IMF can see no further than what has already transpired.

“While the recovery is projected to regain some strength in the reminder of 2014 and 2015, it would be weaker than foreseen in the spring,” the IMF said.

The Fund expects growth to accelerate in advanced economies, with the US and the UK enjoying the strongest rebound. However, the outlook for the eurozone and Japan is more uncertain, as inflation remains below central bank targets.

Acceleration of Growth in Advanced Economies?

I strongly disagree. Germany is on "precarious" footing to say the least, and prospects for the US with a declining global economy are not so bright either.

While I agree with the headline, I disagree with the details as well as how we got here and what to do about things.

But yes, things are precarious, and I suspect, about ready to go over the cliff.

Mike "Mish" Shedlock

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