Quality ETFs In Focus As Global Growth Issues Spiral

Being the latest in the league that was vocal on global growth issues, the World Bank cut its 2016 global growth forecast lately to 2.4% from 2.9% projected in January. The commodity market slump, lackluster demand in advanced economies and frail trade were mainly behind the World Bank’s pessimism. Prior to this, the World Bank slashed its projection for global growth to 2.9% in January from 3.3% estimated last June.

Most Economies Underwent Downgrade

The World Bank expects commodity-exporting emerging economies to log a small growth of 0.4% this year, 1.2 percentage points lower than what was projected in January. The organization believes that these economies are striving to cope with still-low oil prices, metals and other commodities. Though these commodities have recovered a lot lately, the road ahead is long enough to reach the pre-crisis level.

The U.S. – the otherwise improving developed economy – is expected to see 1.9% growth (down from the prior forecast of 2.7%) in 2016 hurt by lower energy sector spending and subdued exports on a higher greenback. The euro zone will likely see 1.6% growth despite significant monetary easing (read: Energy Spending May Resume: Stocks and ETFs in Focus).

IMF Also Cautious on Global Growth

Not only the World Bank, the IMF also reduced its global growth estimate to 3.2% for this year in April. The latest IMF numbers show a reduction of 0.2% from what it projected in January and a cut of 0.4% from the October forecast.

Also, IMF projected that “each percentage point change in China’s growth would lower growth in the rest of the region by 0.15–0.30 of a percentage point” and therefore hinted at ‘severe headwinds’ in Asia (read: Global Growth Worries Loom: ETFs to Play).

ETFs to Play

All in all, investors should be prepared for a muted 2016 as occasional sell-offs are likely to hit the market. So, investors need to be cautious while exposing themselves to the investing world. Below we highlight a few quality ETFs that could protect one’s portfolio irrespective of the market pattern.

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