IMF FORECAST CASTS SHADOW OVER DAVOS


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The International Monetary Fund (IMF) told the World Economic Forum at Davos that it has revised downward its 2020 and 2021 growth forecast for the world’s economy, cutting this year’s outlook from 3.4 to 3.3 percent and next year’s from 3.6 to 3.4 percent.
The glum forecast was mirrored by corporate executives attending the conference. More than 50 percent of the 1,600 surveyed said they expected slowing growth this year, compared to 29 percent last year and just 5 percent in 2018.
Many executives reported their companies are under greater market and economic pressures than at any time since 2009.
An IMF statement at the conference credited the 71 synchronized interest rate cuts by 49 central banks last year with avoiding a global recession.
TREND FORECAST: As we have long noted, central banks will continue to lower interest rates, even those with negative rates, as the global economy slows. And, with the growing realization of the limitations of monetary policy, nations will go deeper into debt by employing fiscal policies, such as infrastructure building, to create jobs and boost economic growth.
It should be noted that in America, in the past three downturns, the Federal Reserve cut its benchmark rate by some 5 percentage points. Today, with the overnight rate between 1.5 percent to 1.75 percent and little room to go lower, the U.S., racking up trillion dollar a year deficits, will also employ fiscal policy measures, thus building a bigger debt bubble.
Overall, considering global economies are slowing and the measures governments and central banks will employ to boost growth, currencies will grow weaker and gold prices will move higher.
Therefore, we maintain high prospects for gold $2,000 per ounce in 2020.

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