USA, WASHINGTON, April 16. Financial markets face three major risks in the near term, said Tobias Adrian, financial advisor and director of the IMF's Monetary and Capital Markets Department, during a briefing on the Global Financial Stability Report held as part of the IMF's Spring Meetings in Washington, Trend reports.
“What we've seen is really tremendous optimism in the financial markets. Inflation is expected to return to target in countries around the world as economic activity slows. We have seen credit spreads narrowing even for riskier borrowers. So many countries that were excluded from global capital markets for the last year or a year and a half have returned to the market since the beginning of the year. As for the rest, there are some short and medium term risks,” said Adrian.
He pointed out that the short-term risks are mainly about inflation.
“We forecast a decline in inflation. However, there are certainly differences across countries as to how quickly inflation falls and what central banks need to do in the future to bring inflation back to target. So that's a risk. The second near-term risk is that we see relatively low volatility and relatively high correlation between asset markets, while fundamental uncertainty remains somewhat elevated. There are so many geopolitical tensions around the world. And there are other economic headwinds that could lead to a reassessment of the future economic situation,” said Adrian.
He added that the third theme was the tightening of credit spreads and underlying credit quality, which is deteriorating in some areas.
“So overall the global economy is very strong. There was a positive surprise in many countries, especially the USA, but China also announced stronger than expected GDP figures just yesterday. So we see a lot of strength, but we also see certain corners where default rates are increasing, that is some weakness,” he added.
The spring meetings of the International Monetary Fund and the World Bank Group began on April 15th.
The main ministerial meetings and events will take place from April 17th to 19th, with other events and activities taking place during the week of April 15th to 20th.
The meeting will focus on meetings of the IMF's Joint Development Committee and the International Monetary and Financial Committee to discuss progress in the work of the World Bank Group and the IMF.
The spring meetings bring together central bankers, finance and development ministers, parliamentarians, private sector leaders, representatives of civil society organizations and academics to discuss issues of global importance, including the outlook for the global economy, poverty eradication, economic development and the effectiveness of the help.
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