6 Stocks To Prepare For A Global Economic Slowdown

On Jan 21, the International Monetary Fund (IMF) reduced its global economic forecasts for this year and the next. A slowdown in Europe and certain emerging markets, and the ongoing trade conflicts were cited as the major reasons for these cuts. The global lending agency also thinks a slowdown in China and a likely “No Deal” Brexit are the other factors causing a reduction in its projections.

The IMF’s fears were echoed by fresh official data released by China’s government. The world’s second-largest economy expanded at its slowest pace in 28 years in 2018, likely an outcome of the U.S.-China trade war.

With a global economic slowdown looking imminent, it makes sense to fortify your portfolio for such conditions. In such an event, the demand for products and services generated by utilities, consumer staples, and medical companies remain invariant. Investing in stocks from these sectors looks like a smart option.

IMF Reduces Global Forecasts for 2019 and 2020

The IMF has revised its global forecasts for 2019 and 2020 to 3.5% and 3.6%, respectively. These are 0.2% and 0.1% lower for respectively 2019 and 2020 than the projections released earlier in October. That this is the second such cut in three months is a cause for great concern. The IMF had made the last such reduction in October, citing the ongoing U.S.-China trade war as a major issue.

The latest cuts also acquire special significance since they were released ahead of the annual World Economic Forum, which began on Monday at Davos, Switzerland. Global policy leaders will now possibly have to discuss ways and means to cope with an end to an extended period of stable growth.

According to IMF Managing Director Christine Lagarde: “After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising.” Lagarde has urged policymakers to prepare themselves for a “serious slowdown” by improving their economies’ ability to handle such risks.

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