Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Canadian Pension Risk Strategies
    • 2023 Retirement Income
Breadcrumb
  1. Home
  2. ECONOMY
April 11, 2023 02:41 PM

IMF forecasts modest global growth, downside risks

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Gourinchas_IMF_i.jpg
    Bloomberg
    Pierre-Olivier Gourinchas, economic counselor and director of the research department at the International Monetary Fund.

    Downside risks to the global economy dominated the International Monetary Fund's latest economic outlook Tuesday as officials there warned of "stickier" inflation, central bank uncertainty and other factors that could make investors nervous.

    While the latest IMF forecast said the global economy would grow 2.8% this year and 3% starting in 2024, it also offered a 25% chance that the annual global growth rate would fall below 2% in 2023. A "significant" financial shock that could risk a global recession was given a 15% chance.

    Pierre-Olivier Gourinchas, IMF's chief economist, also warned that "the financial sector had become too complacent" despite last year's U.K. gilt crisis that stressed pension funds' liability-driven investing programs there, and recent bank crises in the U.S.

    "The U.K. gilt market and recent banking turbulence in United States illustrate that vulnerabilities still exist," Mr. Gourinchas said in a media briefing about the IMF's World Economic Outlook. "Nervous investors often look for the weakest link, as they did with Credit Suisse."

    For banks, the biggest concern is interest-rate risk, rather than credit risk, IMF economists said at a related briefing. Rapid interest-rate hikes were the culprit in the recent collapse of Silicon Valley Bank, money managers told Pensions & Investments as that crisis unfolded. In March, the Bank of England warned of an "urgent need" for increased resilience among non-bank financial institutions and activities, including LDI programs and money market funds.

    Side effects from several rapid central bank hikes "are becoming apparent, as banking sector vulnerabilities have come into focus and fears of contagion have risen across the broader financial sector, including non-bank financial institutions," said the IMF's Global Financial Stability Report also released Tuesday.

    "Stubbornly high inflation and recent financial sector turmoil" erased signs earlier this year that between lower inflation and steady growth, the global economy could achieve a soft landing, the report said.

    The latest IMF forecasts "once again make for grim reading in their assessment" of the U.K. and global economies, said Luke Bartholomew, senior economist with abrdn, in an email. While some of the IMF numerical forecasts might prove to be wrong, "the U.K. economy is likely to endure recession-like conditions for much of this year," while the IMF was not pessimistic enough on U.S. growth, with the risk of tightening credit conditions tipping the U.S. economy into recession later this year, and risking "large spillovers to the rest of the world," Mr. Bartholomew said.

    "If the IMF is right about this, and we are right about a recession, the debate will move to how much central banks are likely to cut interest rates in the coming years. Investors may find this period of high interest rates was simply a brief interruption of the low-rate world they have been dealing with since the global financial crisis," he said.

    Related Articles
    IMF cuts growth outlook after Russia invasion, China lockdowns
    Top money managers see global stocks gaining in 2023
    Institutional investors fear interest-rate hikes could lead to liquidity crisis – CoreData
    Recommended for You
    Larry Summers
    Former Treasury Secretary Summers cites Employment Cost index as key economic indicator
    Nancy Curtin
    SVB collapse not a contagion, but will lead to more banking rules – AlTi CIO
    China_Flag_i.jpg
    China's GDP growth beats expectations but investment data points mixed
    The Plan Sponsor’s Guide to Retirement Income
    Sponsored Content: The Plan Sponsor’s Guide to Retirement Income

    Reader Poll

    April 26, 2023
     
    SEE MORE POLLS >
    Sponsored
    White Papers
    2023 Global Climate Survey - Are investors moving from aspiration to implementa…
    The Value of Value is Still Compelling
    Valuing Banks: Hidden Losses Versus Assets
    Research for Institutional Money Management
    Targeting Impact with Indexes
    Global Fixed Income: Volatility and Uncertainty Here to Stay
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Canadian Pension Risk Strategies
      • 2023 Retirement Income