IMF Sees No Clear Signs Of A Turning Point

January 21, 2020

By Orbex – In its latest World Economic Outlook released yesterday, the IMF took investors somewhat by surprise. The institution once again downgraded its global growth forecasts.

The downgrades come despite positive developments in the US/China trade space as well as with Brexit negotiations.

Disappointingly, the IMF wrote in the release that there are “no clear signs of a turning point” for the global economy despite these recent developments.

Global Growth Revised Lower

Global growth is now forecast to have printed 2.9% in 2019. This is down from the prior 3% forecast at the last update.

This means that expectations are now for growth to print its worst annual figure since the global financial crisis.


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For 2020, forecasts indicate that global growth will rebound to 3.3%. But, this is below the 3.4% figure given at the last update.

Recovery Uncertain

Gita Gopinath, the IMF chief’s economist said:

“The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies.”

Gopinath further explained that the downgrades to the growth forecast are “owed largely to downward revisions for India”.

However, the report was not totally bearish. The outlook noted that they expect the signing of the “phase one” trade deal between the US and China to drive some improvement in trade volumes.

Additionally, the report noted that the Brexit agreement has assuaged some of the concerns for Europe.

Global Risks Still Tilted to the Downside

However, the IMF concluded that despite these positive developments, “the risks to the global economy remain on the downside.”

The IMF continued that, given that interest rates around the globe are at or near record lows, there is less cope to deal with a further downturn.

In terms of dealing with such a development, the IMF noted that we might need a “coordinated fiscal response.”

Signs of Stabilisation – No Turning Point Yet

Commenting again, IMF chief economist Gita Gopinath said:

“While there are signs of stabilization the global outlook remains sluggish and there are no clear signs of a turning point. There is simply no room for complacency, and the world needs stronger multilateral cooperation and national-level policies to support a sustained recovery that benefits all”.

Technical Perspective

The rally in USDJPY is at a crossroads. Following the breakout above the 109.71 resistance, price is now testing the bearish trend line from 2018 highs.

For now, price continues to move higher within the local bullish channel from 2019 lows suggesting a further push higher. The channel top is the next resistance level to watch, ahead of the 112.14 structural resistance.

By Orbex