“The International Monetary Fund’s pro-forma World Outlook says one thing: the worried tone and faces of its officials in Davos tell quite another.
“We came far closer to a global economic and financial crisis over the summer than most people realised. While drastic action by central banks averted a recessionary chain-reaction, the world has patently not achieved “escape velocity” and remains vulnerable to the slightest shock.
“That is the message – and not so sotto voce, either – from the IMF’s managing director Kristalina Georgieva. “We have not reached a turning point yet,” she said.
“Mrs Georgieva’s advice to the world’s governments is switch to a “systematic reliance on fiscal tools” and keep preparing for the storm. “Be ready to act if growth slows again. That means having your portfolio of projects prepared,” she said.
“This fragility remains despite 71 interest rate cuts by 49 central banks worldwide and a return to quantitative easing by the US Federal Reserve and the European Central Bank, what she described as the “most synchronised monetary easing” since the financial crisis.”
https://www.telegraph.co.uk/business/2020/01/21/alarmed-imf-really-thinks-davos/
“Canada and the rest of the developed world have entered an era of low interest rates and sluggish growth. We should expect interest rates to remain low by historical standards when the next recession occurs.
“Since the Bank of Canada will be unable to cut rates much below zero, monetary policy alone won’t be able to effectively fight the next recession.”
“President Donald Trump and his top economic advisor Larry Kudlow …offered different views on how effective below-zero government bond yields are on stimulating growth.
“As he has in the past, Trump heaped praise on the practice, while Kudlow said such central bank contrivances are no substitute for pro-growth fiscal policy.”
“U.S. shale oil fracking has already peaked and is in a period of sustained contraction, according to two major providers of services to the industry…
“Slower output growth would have global ramifications, given additional American barrels are forecast to account for most of the increase in worldwide supply this year.”
“The Bank of England will examine how Britain could adopt a bitcoin-style digital currency as part of a global group of central banks…
“Bank officials will meet with the Bank of Japan, the European Central Bank, the Sveriges Riksbank, the Bank of Canada, the Swiss National Bank and the Bank for International Settlements to pool research…”
“Debt is all around us, even if sometimes we cannot see it. Excessive debt is behind most of the corporate struggles and failures we see played out on these pages every day. Debt stalks many households and last year specialist charities helped hundreds of thousands of people to manage or consolidate their debts.
“Debt is also back in fashion in [UK] government.”
“Eurozone companies’ demand for bank loans has fallen for the first time in six years, in a worrying sign for the region’s faltering economy and the European Central Bank’s attempt to stimulate more lending.”
https://www.ft.com/content/0a0a11ac-3c33-11ea-a01a-bae547046735
“Libya’s oil output will collapse “within days” to the lowest level since the 2011 civil war as a blockade of its export terminals
“….has forced a rapid shutdown of production and electricity blackouts in parts of the country, according to the head of the national oil company.”
https://www.ft.com/content/bf045b36-3c4b-11ea-b232-000f4477fbca
“India may be experiencing the most glaring setback among emerging economies, but its double pain of slowing growth and surging inflation is spreading far and wide…
“An analysis of 30 major emerging economies, based on public data and Bloomberg surveys, shows half of them slowing or stagnating in 2020. Two-thirds are set to experience a simultaneous acceleration in inflation. That’s a potent source of mini-economic crises across the group.”
https://finance.yahoo.com/news/india-painful-double-whammy-spreads-020000559.html
“…sagging exports and global trade tensions pulled [South Korea’s] annual [GDP] reading to its lowest level since 2009.
“The annual slowdown comes as President Moon Jae-in’s administration is set to sharply boost fiscal spending this year and as the Bank of Korea mulls further stimulus to shield the economy from the global slowdown.”
“An economic survey on Wednesday meanwhile showed the fires were causing Australians to tighten their purse strings, a sign the natural disaster is putting pressure on the world’s 14th-biggest economy…
“Consumer sentiment in January was 6.2% lower than a year earlier, according to the Melbourne Institute and Westpac Bank survey released on Wednesday.”
“Global aluminum production fell by 1.0% last year in its first annual contraction since the Global Financial Crisis in 2009. That should have been good news for the aluminum price, but London Metal Exchange three-month metal spent most of last year grinding steadily lower…
“The problem is that a rare year of lower production coincided with an equally rare year of weak aluminum demand.”
“A global economic slowdown — caused partly, but not entirely, by trade tensions — has curbed demand for American products abroad. … That slowdown is driving the deceleration of job growth across the American economy.
“Railroads have been hit particularly hard, analysts said.”
https://www.nytimes.com/2020/01/22/business/economy/trade-economy.html
“The outbreak of a new virus in China has sent shivers through world financial markets, with investors drawing comparisons to the 2003 SARS (Severe Acute Respiratory Syndrome) outbreak in order to assess its potential economic impact…
“An 2018 IMF paper titled New and resurgent infectious diseases can have far-reaching economic repercussions by David Bloom, Daniel Cadarette, and JP Sevilla notes that even when the health impact of an outbreak is relatively limited, economic consequences can be quickly magnified.”
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