The International Monetary Fund (IMF) revised down the global economic outlook from 3.6% to 3.2% for 2022. We expect further downgrades to this IMF outlook by an additional one percent, or another $1 trillion less in nominal economic activity.
Under this slowing global economic backdrop, we prefer to remain significantly underweight international developed markets. Russia's invasion of Ukraine will complicate Europe's growth outlook for many years to come. Europe is not only in a prolonged energy crisis, but also in a leadership crisis. In a short month, Europe lost two of its leaders; U.K.’s Boris Johnson had to resign due to a myriad of scandals, and Italy’s Mario Draghi had to leave after losing political support backing him.
The U.S. dollar continues to be strong, as the U.S. economy’s relatively better outlook is confirmed by much better-than-expected employment data. On the other hand, Europe is in a serious rough patch. The European Central Bank is already in crisis mode, buying peripheral country bonds to avoid another European financial crisis. In UK, the last time the British pound was this low, Margaret Thatcher was Prime Minister. In Japan, the yen remains at the weakest levels not seen since the late 1990s, while former Prime Minister, Shinzo Abe’s, assassination took center stage and saddened millions.
Request Accessible PDF
An accessible PDF allows users of adaptive technology to navigate and access PDF content. All fields are required unless otherwise noted.