The Risk of a Sharp Global Slow-down Has Eased?

2 Mar


In a report to the G20 Finance Ministers in Mexico over the weekend, the International Monetary Fund (IMF) confirmed :-

  • the probability of a sharp global slowdown has eased due to recent policy measures adopted in the Eurozone to tackle its debt crisis
  • the Eurozone still needs to act decisively on multiple fronts to successfully resolve its sovereign debt crisis
  • The European Central Bank (ECB) needs to continue injecting liquidity and stay fully engaged in securities purchases to help shore up financial stability
  • the ECB Monetary Policy should focus on ensuring price stability
  • in the United States, Britain and Japan, central banks should stand ready to expand unconventional measures if the outlook worsens
  • in emerging markets, growth had slowed more than expected
  • in emerging countries with high inflation and public debt, including India and some economies in the Middle East, a “cautious stance” to policy easing is needed
  • higher oil prices are a risk to global growth and repeated that the impact of an oil supply shock in the Middle East “could be large” if supplies were not increased elsewhere.

Saudi Arabia assured G20 finance ministers over the weekend it was prepared to release more oil if necessary to make up for supply disruptions.


So What for The Markets?

This is all positive news but the message is clear, there is a definite improvement in the situation but this does not mean the issues are resolved. It means we are working towards resolving the issues and the measures taken and are being taken are having a positive effect.

The question we do not have an answer for, is will this lead to a successful resolution or just a short-term blip. Personally, I am optimistic for the future but think short-term this optimism is over-played.

So depending on your time horizon, attitude to investment risk and outlook, you make your investment decisions. I would suggest that you think carefully, act prudently and “tread carefully”.

My style of investing is to be careful, minimise losses and make the best out of opportunities as they arise. I invest based on market outlook, fundamentals, asset allocation and opportunities created by the market. Look to both markets in favour and those out of favour to develop an effective strategy. Finally, don’t be spooked by short-term panics and don’t hold onto failing holdings; look to the future and only make rational decisions on avoid emotive decisions.

Any questions contact me. Email

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