The IMF’s economists think that the chances of a negative surprise to the world economy are bigger than the chances of a positive surprise:
Storm clouds seen over markets: IMF
WASHINGTON (MarketWatch) — After several years of low interest rates and ample liquidity, storm clouds are developing over global financial markets, according to a new report from the International Monetary Fund.
Although the global financial system has gathered strength and resilience in 2005, “a number of cyclical challenges appear to be gathering on the horizon, which necessitates a more nuanced view of the financial outlook for the remainder of 2006 and beyond,” the study, called the Global Financial Stability Report, concluded.
Despite the worries, continuation of sunny skies was still the baseline forecast of IMF researchers.
“The most likely cyclical setting for financial markets in 2006 could be defined as ‘not bad, but not as good as the stellar year 2005,’ the report concluded. But the storm clouds are mounting and questions remain about how fast they might arrive and whether financial systems will be able to handle any added stress.