The IMF-World Bank spring meetings took place in Washington DC last weekend. Our team attended numerous seminars with policymakers, academics, and investors from around the world. In Takeaways from 2019 IMF-World Bank spring meetings we described in detail the most important views expressed at the meetings. Here are the main takeaways:
- Global economy: May the unloved recovery live on. In contrast to the gloomy picture painted by the IMF itself, investors and policymakers in attendance presented a more benign view for the global economy. Given the muted inflationary dynamics, monetary policy is seen as enjoying the luxury of accompanying economic growth. Investors said they are long risk assets and looking to stay long, though they find it hard to identify opportunities to add risk given current valuations. Medium-term worries: the potential abuse of pro-cyclical macro policies under a second Trump mandate and threats to the Fed’s independence, the status of the US dollar as global reserve currency on the back of the overuse of sanctions as a policy tool, rising inequality, Europe's lack of effective tools were it to face additional shocks, etc.
- China and emerging markets: Optimism and opportunities despite worries. Better numbers out of China in the coming months are part of most participants' base case. Attendees assumed the US and China would reach a trade truce in a matter of weeks, but didn’t believe such a deal would be comprehensive or durable. Emerging market central banks issued dovish messages. The overall environment was viewed as supportive of emerging market economies and assets for the next few months.
- Sustainability: Focus on accountability for delivering meaningful impact. The urgent need for collaborative action on climate change was emphasized. The importance of innovation and mobilization of private investment if we are to achieve the UN Sustainable Development Goals and other challenges was highlighted. Accountability for delivering meaningful impact was also in focus, with the International Finance Corporation (IFC) announcing its Operating Principles for Impact Management together with 60 founding signatories including UBS. The principles outline key guidelines for impact investors to adopt in an effort to combat marketing-driven “impact-washing.”
Here some of the most memorable quotes of the weekend:
- “Washington is a center of one bad idea after another.” – US Republican congressman
- “I find it hard to exaggerate the peril [of climate change].” – Sir David Attenborough in conversation with Christine Lagarde, IMF Managing Director
- “I’m in touch with congressmen, governors, and mayors, and there is one thing that unites us all: the recognition that the country is broke. It's beautiful.”– High-ranking Brazilian official
- “MMT [modern monetary theory] gives you a license to do all the things that your parents always said no to.” – High-ranking US bank executive
- "Our overuse of sanctions as a policy tool will soon come back to haunt us!" – Former US ambassador
- "You fool around in my neighborhood, I can do it in your backyard, too." – Former US official, referring to Russia's perspective on its involvement in Venezuela.
For those interested, the full set of notes also includes more detailed country takeaways on Brazil, Mexico, Argentina, Venezuela, Turkey, and Russia.
Alejo Czerwonko, Emerging Markets Strategist Americas, UBS Financial Services Inc. (UBS FS)
Andrew Lee, Head Sustainable & Impact Investing Americas, UBS Financial Services Inc. (UBS FS)
Brennan Azevedo, Emerging Markets Associate Americas, UBS Financial Services Inc. (UBS FS)
Xingchen Yu, Emerging Markets Strategist Americas, UBS Financial Services Inc. (UBS FS)