A sobering report from the International Monetary Fund (IMF) predicted ongoing global economic woes, offered little new information, according to Andrew Wilkinson, chief economist strategist at Miller Tabak & Co.
“By the time we’d plodded through the early morning mid-Manhattan rain, stock index futures had shrugged off news that the IMF had wound down its growth projections,” Wilkinson notes. “By 8:30 a.m. ET, the December futures contract suggests a positive start to trading rather than blindly following the headlines.”
In its latest World Economic Outlook, the IMF projected global growth of 3.3% this year and 3.6% in 2013, a downgrade of 0.2% and 0.3% respectively.
And that wasn’t the only grim prediction in the report: The IMF also said that the probability of a recession occurring in the Eurozone between the second quarter of 2012 and the start of 2013 is 84.6%, up from 48.8% in April of this year. “In other words,” Wilkinson says, “the IMF has taken what was a coin toss and confirmed that recession is a done deal and the risk of it filtering across the rest of the world is reflected in a shallower growth path ahead.”
The future is looking slightly brighter for the United States, which saw the probability of a recession falling from 19.1% to 15.2%. The IMF said that its outlook could improve if concerns about the U.S. “fiscal cliff” were resolved.
Wilkinson also examined the National Federation of Independent Business (NFIB)’s September installment of the Small Business Optimism Index, which showed that although small business owners expect economic conditions to be better six months from now, they are still cautious about hiring and investing in the near-term.