Global Economy Retracts

Daily Analysis - 22/01/2019

IMF warns that Global economy is shrinking

On Monday the International Monetary Fund (IMF) warned that the increase observed in recent years regarding the global economic growth is starting to diminish. After the revision of its estimates for global growth, they announced the fact at the World Economic Forum in Davos.

The Fund now predicts a 3.5% increase rate globally for this year and 3.6 percent for the next year. Those estimates are below the last forecast in October about 0.2 and 0.1 points.

The IMF's Managing Director Christine Lagarde said at the World Economic Forum in Davos: "After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising. But even as the economy continues to move ahead ... it is facing significantly higher risks."

Asian stocks affected by global economic concerns

On Tuesday Asia Equities fell while traders views dropped due to worries regarding the global economy following the IMF’s world economic growth forecast yesterday. In China, Shenzhen component plunged more than 1.4% and ended its trading day at around 7,516.75. The popular Shanghai composite decreased approximately 1.2% and closed around 2,579.69. The Hong Kong's Hang Seng index slid about 0.9% while the Shenzhen composite also dropped more than 1.17% to close at around 1,314.54.

Oil going lower

On Monday the IMF cut its global growth estimates and a study revealed concerns among business leaders. IMF Noted the difficulties confronting the policymakers while they noted that a potential crisis may come from the US-China trade dispute or the Brexit.

On Tuesday Oil prices trimmed under while concerns over global economic increase sparked concerns over expected interest. The U.S. West Texas Intermediate (WTI) was below about 0.1%, at around $53.69 per barrel while the International Brent crude oil futures fell 0.2 %, to $62.62

Dollar getting stronger

On Monday the dollar index was strong at 96.30. It holds its position near a 2-week high of 96.40.

On Tuesday the greenback was near 2-week tops versus its rivals while retardation in China's economy renewed concerns regarding global growth and urged traders shift their investments into a more safe-haven environment. This is a classic move and most of the investors follow this pattern to minimize their risks. The Greenback rose about 0.1% versus the popular yuan to 6.8049, the dollar scored about 1% over the yuan in the last week.

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