No room for optimism on the global economy

Forecasts of a soft landing for the global economy are off the mark – disinflation is at an end and interest rates are on the rise. For safe havens investors should look to gold and the euro

The IMF’s recent forecast for global growth this year suggested a soft landing for the world economy as growth subsides a little from 5% to 4.3%. But it reckoned that financial market conditions would tighten and global imbalances had deepened, increasing vulnerability to shocks. But it seemed relatively sanguine about the prospects of a gradual adjustment to tighter credit and higher costs.

I cannot be so optimistic. Global liquidity is tightening and risk appetite for global financial assets is set to fall.