Global Economy Unruffled by Brexit but Threats Loom

Safe havens such as gold and the yen have given up most of their post-Brexit gains, while equity markets have rallied - but are there other threats around the corner?

Francisco Torralba, Ph.D. 25 August, 2016 | 11:24AM
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Sentiment in financial markets has soured since April, especially after the Brexit referendum. Most analysts have revised down their growth expectations for 2016 and 2017 and cut their inflation forecasts. Monetary policy, accordingly, is now expected to remain accommodative for longer than previously thought.

The biggest effect of Brexit was on Eastern European markets

The odds of a recession in the medium term are now higher, in the eyes of the market, although most analysts do not expect one this year. The experience, however, from previous episodes of volatility post-2008 suggests that the pessimism might be overdone.

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About Author

Francisco Torralba, Ph.D.  Francisco Torralba is an Economist for Morningstar Investment Management.

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