Washington, D.C., January 9, 2015 -
The collapse in oil prices and heightened political uncertainty will continue to reverberate throughout the global economy in 2015, according to the Institute of International Finance's January Capital Markets Monitor.
The IIF noted that these forces are set to reinforce the divergent trends leading towards a bifurcated global economy, with important implications for financial markets. One clear consequence has been heightened concern about global growth prospects in a disinflationary environment.
"In the context of persistent low inflation in many key economic regions, declining oil and commodity prices could reflect over-supply or over-capacity (relative to current demand) in commodities, in addition to a potential over-capacity problem in manufactured goods," said Hung Tran, executive managing director at the IIF. "If true, this would increase the risk of deflation in key parts of the world."
The IIF also noted that political uncertainty and tension have been on the rise over the past year, including in the Middle East with the fight against ISIS and in North and Southeast Asia over island and maritime disputes. However, for a variety of reasons, Europe will likely hold market attention in the coming year.
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The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.