IMF raises its global growth forecast to 6% this year from 5.5%
LONDON: World stocks took a well-earned rest near record highs on Wednesday, as an International Monetary Fund (IMF) forecast of the strongest global growth since the 1970s this year and steady bond and FX markets kept risk appetite buoyant.
While rising global coronavirus disease (COVID-19) cases and geopolitical tensions between China and Taiwan and between Russia and Ukraine ensured it was by no means a fairytale, markets certainly had a Goldilocks feel again.
Europe’s STOXX 600 perched just below the first record high it had hit in over a year on Tuesday. MSCI’s 50-country world index was grinding out a sixth day of gains and Wall Street futures were pointing higher too.
In the bond markets, there was little sign that the benchmark government yields that drive global borrowing costs were gearing up to shoot higher again. The dollar was sitting quietly at a two-week low.
The IMF raised its global growth forecast to 6 percent this year from 5.5 percent on Tuesday, reflecting a rapidly brightening outlook for the US economy.
If realized, that would be the fastest the world economy has grown since 1976, albeit after the steepest annual downturn of the post-war era last year when the pandemic brought commerce to a near standstill at times. “Even with high uncertainty about the path of this pandemic, a way out of this health economic crisis is increasingly visible,” IMF Chief Economist Gita Gopinath said.