Spreadex Market Update
IMF cuts global forecasts
As the European debt crisis continues to drag on, both Japan and the U.S. have shown little progress in handing their budget deficits.
Despite this, Christine Lagarde (managing director of the IMF) has made it clear that political issues are adding to economic uncertainty, slowing growth in both emerging economies and advanced ones.
This is especially bad as the IMF has been relying on emerging economies such as Brazil to pull the world out of the growth slump it is in.
Brazil cut its interest rates on Wednesday and South Korea did the same on Thursday.
In a financial stability report issued by the IMF on Wednesday it was suggested that without swift policy action such as the ECB’s bond-buying programme, premiums for Spanish and Italian bonds would nearly double.
Standard & Poor cut it's interest rating for Spain on Wednesday to just above junk level, Moody’s may follow soon. However, the IMF has said that it is prepared to support a European bailout for Spain, should Madrid ask.
Outside of Europe, Asian shares have dipped lower as weak forecast from U.S. corporate giants highlighted concerns over global demand, particularly in China.
Meanwhile, rising tensions in the Middle East has pulled oil prices off the lows seen recently.
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