Closing poost
Time to wrap up: here are today’s main stories.
Firstly, on the IMF’s annual meetings in Washington DC today:
The UK public finances…
And also:
Larry Elliott: IMF may be upbeat, but it knows where dangers lurk
The IMF has identified three risks to its forecast for 3.2% global growth in the next two years, my colleague Larry Elliott writes:
First, there’s a risk that central banks will be too slow in reducing borrowing costs, leading to slower growth and a reassessment by financial markets of their Goldilocks scenario for the global economy. Markets have bought heavily into the idea that central banks will get policy just right, engineering a return of inflation to targets without a recession. That may be true in the US, it looks less clearcut for the eurozone.
The second risk is that the war in the Middle East escalates and leads to a sharp increase in oil prices. So far, commodity markets have been relaxed about the heightened tension because they see no immediate danger of crude supplies being cut off, but that could rapidly change. Gourinchas said: “An escalation in regional conflicts, especially in the Middle East, could pose serious risks for commodity markets.” It is a warning worth heeding.
Finally, there’s the elephant in the room – the possibility that Donald Trump will return to the White House after next month’s US presidential election. While not mentioning the former president by name, the IMF estimates that a shift towards “undesirable” industrial and trade policies could reduce global GDP by 0.5 percentage points in 2026.
As far as the IMF is concerned, imposing trade barriers and subsidising domestic industry provides a sugar rush but the measures often lead to retaliation and fail to improve living standards in the longer term.
