More What We’re Tracking Today on 4 October 2018
Next week will be all about the outlook for the global economy in 2019 as the IMF and World Bank hold their annual meetings 8-14 October in Jakarta, Indonesia. Expect the durability of the “ongoing recovery” and prospects for the “next crisis” to be high on the minds of the Grand Wizards of the Global Financial System as they convene. The landing page for the meetings is here.
The IMF’s World Economic Outlook is set to be released in the wee hours of Tuesday, 9 October. That’s when the fund gives its view on the growth outlook for the global economy, emerging markets, MENA and Egypt. As is customary, two chapters are already out:
- Chapter 2: The Global Recovery 10 Years after the 2008 Financial Meltdown (Full chapter | accompanying blog)
- Chapter 3: Challenges for Monetary Policy in Emerging Economies as Global Financial Conditions Normalize (Full chapter | accompanying blog)
Also worth reading on the IMF blog: A decade after Lehman, the financial system is safer. Now we must avoid reform fatigue. Preachy? Yup. Relevant? Absolutely.
The domestic press is confused. Shocking, we know.Many outlets have mistaken a World Bank report yesterday on digital transformation in MENA to be the IMF’s World Economic Outlook update. We have more on that in the Speed Round.
EM Zombie Apocalypse to taper off this year, says IIF: Despite a sharp drop in portfolio flows, inflows to emerging markets are expected to stabilize this year, with FDI and other investment flows (mainly banking) holding up well, according to a report from the Institute of International Finance (IIF) (pdf). Inflows to emerging markets will slip to USD 1.14 tn in 2018 from USD 1.26 tn in 2017 and remain broadly stable at USD 1.13 tn in 2019. “This pullback will reduce flows to 3.7% of EM GDP this year—still higher than the 2014-2017 average of 3.4%,” the report said.
The night is darkest before the dawn: “After a notable decline in asset prices and widespread currency depreciation, EM valuations and fund allocations—particularly for equities—have reached levels that should trigger some rebalancing in favor of EM,” the report says.
Downside risks: “While further Fed tightening seems largely priced in, rising U.S.-China trade tensions and China-related policy uncertainty may keep investor sentiment cautious towards emerging markets.”
New GERD manager hired: The Ethiopian government appointed engineer Kifle Horo as the new manager of the USD 4.8 bn Grand Ethiopian Renaissance Dam (GERD), Anadolu reports. Horo replaces Simegnew Bekele who was found dead in his car in Addis Ababa in July with a gunshot wound under his ear, raising suspicion that the case was a homicide. Police later said Bekele committed suicide, ending speculation that Egypt — whose relationship with Ethiopia has been strained by the prospect of GERD choking off our access to Nile water — may have been involved.
Some miscellany for your morning commute or if you have the luxury of time for a second cup of coffee before hitting the road / starting your first meeting / signing into that conference call:
- Do you dream of going rogue? Think big. As in stolen dinosaur bones big. Or USD 500 mn bank heist big.
- Welcome to the Jetsons: Boeing CEO expects aerial taxi prototype to take off within the year. (Financial Times)
- Kavanaugh confirmation vote set for Friday. (Politico)
The Nobel Prize in Chemistry was awarded to three scientists who “harnessed the power of evolution” in their work, the Royal Swedish Academy of Sciences announced yesterday (pdf). America’s Frances Arnold was awarded half the prize for the “directed evolution of enzymes,” while the UK’s Sir Gregory Winter and the US’ George Smith share the second half for developing a method known as phage display. The Nobel peace prize will be announced tomorrow, while the prize for economic sciences is to be unveiled on Monday.