Global uncertainty aggravates economic growth

A high level of uncertainty has characterized the global macroeconomic landscape since the COVID-19 pandemic, according to the IMF's Global Financial Stability Report. High macroeconomic uncertainty can profoundly affect macrofinancial stability by exacerbating downside market tail risks, delaying consumption and investment decisions, and reducing credit supply. It can also have effects on GDP growth. According to the IMF, an increase in macroeconomic uncertainty is associated with a significant rise in the downside risk to future GDP growth. Most recently, geopolitical risks have been rising. In particular, the war in Ukraine, tensions in the Middle East, and the upcoming US elections are adding to the high level of uncertainty. Although we expect further economic recovery in the region, downside risks have been mounting both at a global and regional level. Today's release of the PMI indices will indicate whether the slowdown of the manufacturing sector continues or a change in the trend may be in sight.