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Euro Stocks Low Ahead of IMF Forecast

European stocks were lower amid a US holiday and ahead of a Davos meeting. Political and business leaders are to discuss the global economy at the World Economic Forum.

The pan-European index euro STOXX 50 slipped 15 points or 0.4%. In Germany, the DAX traded 0.2% higher, or 30 points. Moreover, in France, the CAC 40 gained 21 points or 0.3%. The FTSE in the United Kingdom lost 21 points or 0.3%.

Later in the day, the International Monetary Fund will present new forecasts for the global economy. In its last update, the Fund estimated a gross domestic product growth of 3.5% this year. That’s higher from 3.2% in 2019.

Last Friday, the Fund’s Managing Director Kristalina Georgieva said the trade deal between the US and China would reduce uncertainty. Such uncertainty has weighed heavily on global economic growth.

Previously, the Fund had estimated global trade risks that would slash 0.8% off international growth.

The US stock markets were closed on Monday as a celebration of Martin Luther King Day. This holiday may thin the trading activity in Europe.

IMF Warns not to Repeat of the “Roaring 20s.”

Meanwhile, the IMF also warned countries not to let the next decade be a repeat of the “roaring 20s” financial disaster.

Georgieva compared the new decade that 2020 started to the 1920s. She said that the speeding growth in the 1920s ultimately ended in “a financial disaster,” or the Great Depression.

She said that even though the gap between countries has decreased, inequality within countries is growing. And then, she described this inequality as “not a good thing.”

Georgieva called out the UK, saying that the “top 10% control nearly as much wealth as the bottom 50%.” Inequality was also growing in most OECD countries, she added.

In May, a poverty expert said austerity cuts in the UK worsened inequality and poverty.

Georgieva also warned not to take financial stability for granted, adding the new variable—climate change—to the equation.

She described climate change as a “new driver of shocks and uncertainty.” At the same time, she believed it was a new opportunity for economic transformation. Also, she added that climate change most affect the poor and the most vulnerable.

Georgieva took the position as the head of the IMF in October. She replaced Christine Lagarde, who is now serving as the director of the European Central Bank.

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