Monday , 14 October 2024

IMF's "World Economic Update" & "Global Financial Stability" Reports Based on Questionable Optimism

The extremely optimistic assumptions on which both of the recent International Monetary Fund’s ‘World Economic Update’ and ‘Global Financial Stability Report’ are based are such that, given all the attendant circumstances, I do not place much weight on either of them. Here is a summary of what the reports have to say and why I have come to that conclusion. Words: 625

So says Ian R. Campbell (www.StockResearchPortal.com) in paraphrased excerpts from one of the components of his subscription service* which is presented here with his kind permission for posting on www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in any article re-posting to avoid copyright infringement.

Campbell goes on to say, in part:

The IMF’s World Economic Outlook Update

The IMF, in its World Economic Outlook Update, says:

  • “the past three months have shown signs of weakness in the global recovery” (rephrased);
  • subject to two assumptions, developments in the past three months will “only result in a minor setback to the global outlook, with global growth at 3.5% in 2012 and 3.9% in 2013, marginally lower than (our) April 2012 (outlook)”. The two assumptions made by the IMF when reaching that conclusion are:
    • “there will be sufficient policy action to allow financial conditions in the euro area periphery to ease gradually”, and
    • “recent policy easing in emerging market economies will gain traction”.

As I see things,…given all the attendant circumstances…, I do not place much weight on their Outlook.

Take Note:

Go here to receive Your Daily Intelligence Report with links to the latest articles posted on munKNEE.com. It’s FREE!

An easy “unsubscribe” feature is provided should you decide to cancel at any time.

 The IMF’s Global Financial Stability Report

The…report begins by saying “risks to financial stability have increased since (our) April, 2012 report”, and focuses on what the IMF sees as:

  • the importance of “timely implementation of the recently agreed measures” announced two weeks ago at the European Union leaders’ summit meeting then held in Brussels. The IMF Report makes no mention of that agreement being ‘conditional’, and by chance the IMF Report was released on the same day the German Constitutional Court announced it was postponing its decision on the constitutionality of the European Stability Mechanismuntil mid-September; and,
  • uncertain U.S. fiscal outlook and federal debt ceiling issues that “present a latent risk to financial stability”.

An underlying dependence on the European leaders summit agreement being implemented as ‘conditionally agreed’ and in a ‘timely manner’ both seem questionable to me.

Other IMF Statements

Concurrently, in yet another IMF statement, the IMF said that it was now forecasting improved fiscal deficits for Greece, but higher public debt:GDP numbers for this year and 2013 for Greece. This makes sense if the Greek government succeeds in enforcing meaningful austerity measures immediately if not sooner, and in circumstances of what appears to be Greece’s continuing drop in GDP.

Conclusion

I generally pay close attention to what is said by Christine Lagarde, the IMF Managing Director but, while I understand why the IMF can’t come out and saynothing is happening fast, and as a result the world economic situation, particularly that of the Eurozone and the United States, is likely to continue to deteriorate, I am less impressed with yesterday’s World Economic Update and Global Financial Stability Report than I am with the typical statements made by her.

Topical References:

  1. World Economic Outlook Update – New Setbacks, Further Policy Action Needed, from The International Monetary Fund, July 16, 2012 – important reading time 5 minutes (Executive Summary 1 minute);
  2. Global Financial Stability Report GFSR Market Update – Intense Financial Risks: Time for Action, from The International Monetary Fund, July 16, 2012 – important reading time 5 minutes (Executive Summary 1 minute);
  3. IMF raises its two-year forecast, from Ekathimerini, July 16, 2012 – reading time 1 minute;
  4. As IMF trims global growth outlook, Canada continues modest growth, from The Financial Post, Gordon Isfeld, July 16, 2012 – reading time 2 minutes; and
  5. IMF cuts global growth forecast, from The Financial Post, from Reuters, Lesley Wroughton, Gordon Isfeld, July 16, 2012 – reading time 2 minutes.

*(The above is just one of many of Stock Research Portal’s daily commentaries, critiques, ‘Think for Yourself’ challenges and ‘Speak For Themselves’ World Headline summaries. Subscribe now to receive our full, unabridged newsletter.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. What Do You Think – Is Spain on the Brink?

Spain-130x90

Economic risk in the Eurozone and elsewhere appears to be escalating, and what is said here describes what may prove to be the ‘biggest crack yet in Humpty Dumpty’s shell’.

2. European Sovereign Debt Crisis to End in a Catastrophic, Painful, Epic Meltdown! Are You Financially Prepared?

time

I have a sinking suspicion – a feeling I just can’t shake – based on multiple fundamental, technical, and timing indicators….[that] the end is near. I’m not talking about some Mayan calendar apocalypse kind of thing….[but] a catastrophic, painful, epic meltdown-type endgame for this European sovereign debt crisis…[[Let me explain why I see that to be the eventual outcome.] Words: 810

3. Graham Summers: This Is What Is REALLY Happening In Europe!

european_union_flags_1

I’ve often been labeled as “Gloom and Doom” in the past, but the situation in Europe today is beyond anything I’ve ever seen before. It is highly likely that the EU will not exist in their current form by the end of the year. I realize some of this may sound overly dramatic but the following should give you an idea of how serious things are getting: [Words: 715]

4. Germany Could Initiate the Collapse of the European Union Within Months – Here’s Why

250px-Flag_of_Germany_svg

As many of you know, my primary forecast regarding Europe is that the EU will be broken up and/or collapse within the coming months. The reasons for this are financial, monetary and political in nature [with much of the latter dependant on what happens in Germany. Let me explain.] Words: 516

5. This Picture of European Economic Reality is Worth 26,911 Words – Take a Look

european_union_flags_1

The European economic situation is explained very simply in the illustration below. Take a look.

6. Europe Heading Towards a Full-scale Disaster – Here’s Why

european_union_flags_1

Europe is heading into a full-scale disaster [because,] you see, the debt problems in Europe are not simply related to Greece. They are SYSTEMIC. The European banking system’s leverage levels alone position Europe for a full-scale banking collapse on par with Lehman Brothers. Again, I’m talking about Europe’s ENTIRE banking system collapsing. This is not a question of “if,” it is a question of “when” and it will very likely happen before the end of 2012. Words: 750

7. The Eurozone Crisis: A Quick Guide to Key Dates, Developments and Investment Implications

euro

Follow the eurozone crisis as it unfolds with this quick guide to key dates, developments, and investment implications.

8. IMF’s Lagarde Warns: European Leaders Have 3 Months to Save the Euro!

euro

As the focus of the euro crisis shifts to Italy, IMF head Christine Lagarde has warned that European leaders have less than three months to save the euro. Meanwhile top economist Nouriel Roubini has called on Berlin to drop its obsession with austerity, proposing that the German government give every household a 1,000 euro [$1,250 US equivalent] voucher to spend on a vacation in Southern Europe. Words: 990

9. European Union Will Collapse Before the End of 2012: This is NOT Doom & Gloom – This IS Reality!

european_union_flags_1

[The European Union] will collapse before the end of the year and very likely before the end of the summer. When this crisis hits it will be worse than 2008 and the world Central Banks will not be able to control the damage. What makes this time different are several items: [Let me explain]. Words: 1400

10. The Euro System is Doomed and the End Will Look Like This

20110618_WOP332_168

In every economic crisis there comes a moment of clarity. In Europe soon, millions of people will wake up to realize that the euro-as-we-know-it is gone. Economic chaos awaits them. [Let us explain why that is the case and how it will come about.] Words: 680

11. Here’s the “No BS” Situation with Europe – and Its BAD!

european_union_flags_1

The media is rife with misrepresentations and analysis of the EU. Here’s the real deal, no BS situation with Europe – and its BAD! Words: 900

12. Why & How the Euro Came About and What the Future Holds

euro

Introduction: “The crisis in the eurozone is the result of France’s persistent pursuit of the “European project,” the goal of political unification that began after World War II [with the hope] that a political union, a United States of Europe similar to America’s, would…prevent the types of conflict that had caused three major European wars…[and] also make Europe a power comparable to the United States, and thereby give France, with its sophisticated foreign service, an important role in European and world affairs.” [What went wrong and what does the future hold?]

13. Simone Foxman: “The Eurozone Crisis For Dummies”

eurozone-crisis-for-dummies-third-addition

Worries about an economic catastrophe in Europe are heating up again, and dramatic forecasts about doom are popping up everywhere. What’s important? How did we get here? Let’s put this all in perspective. Words: 2356

14. Graham Summers: Collapse of Europe is Guaranteed! Here’s Why

euro

I continue to see articles in the media claiming that Europe’s problems are solved. Either the folks writing these articles can’t do simple math, or they don’t bother actually reading any of the political news coming out of Europe [so let me present 3 data points that guarantee Europe will collapse at some point in the near future]. Words: 722

15. Europe is Heading Off a Financial Cliff! Here’s Why & How to Protect Your Portfolio

eurozone

Europe is heading off a cliff! From one end of the continent to the other, the numbers suggest a double-dip recession is striking with brutal force…and with the world as interconnected as it is these days, what happens in Europe WILL impact our companies and markets here so now is the time to position your portfolio to weather the storm. Words: 900

16. Americans Take Note: European Crisis is Adversely Affecting U.S. in MAJOR Way – Here’s Proof

tsunamu

Americans, don’t think for one moment that the crises in Europe are irrelevant! This past April the U.S had the largest monthly decline in exports to Europe in the past 7.5 years and this trend will only get worse – much worse – as the crises spread and linger. Exports to Europe are now down 2.7% from April 2011, the first yearly decline since February 2010. The chart below says it all.