Resilience and fragmentation were the major themes
at this year's IMF annual meetings.
It was however not just a case of 'US exceptionalism'.
Aside from China – which presenters sometimes
competed to be the most pessimistic on – resilience
was remarked on all the way across the DM-EM
Higher for longer' dominated central bank
communications and was judged to be a key
component contributing to the recent rise in yields.
Fiscal largesse (primarily the US's) was also a
prominent topic – one that was not discussed at the
IMF Spring meetings. Bond vigilantes may eventually
force a government adjustment, but few thought
governments would self-correct.
Deglobalisation pressures and reshoring were also top
of mind. The dollar's position is not under threat, but
trade flows and shifting production locations were
thought to be evidence of fragmentation. China's
success in electric vehicle manufacturing is regarded
as good for the environment but expected to be the
next front in global trade tensions.
AI's potential impact on productivity and geopolitical
tensions was explored, with experts urging caution in
implementation and integration and an immediate
boost to productivity considered unlikely.