The International Monetary Fund (IMF) isn’t making any friends around the world after it cut growth forecasts for major economies like the U.S. It should put certain ETFs on the watch list if investors are looking to get international exposure via funds that focus on the world’s economic powerhouses like the U.S., China, Europe and India.
The IMF is predicting that the global economy will rebound by 3.3% this year after projections were an estimated 2.9% last year. While higher, this number represents a downgrade from the 3.4% growth expected during last October’s 2019 World Economic Outlook.
The lower forecast came after the IMF projected less growth for India this year. versus October’s forecast Even with a “phase one” U.S.-China trade deal agreement, it wasn’t enough to revise the IMF’s projections higher compared to last year’s forecasts.
“The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels,” Gita Gopinath, the IMF’s chief economist, said in a written statement. “Some risks have partially receded with the announcement of a U.S.-China Phase I trade deal and lower likelihood of a no-deal Brexit.”
Here are some global growth markdowns predicted by the IMF:
- India is expected to grow 5.8% in 2020, which represents a 1.2 percentage point markdown from the IMF’s October forecast.
- China is expected to grow 0.2 percentage points to 6.0% thanks to the U.S.-China trade deal.
- The U.S. is projected to grow by 2.0% this year, which is 0.1 percentage points less compared to the IMF’s October forecast.
- European growth was revised down by 0.1 percentage points to 1.3%, according to the IMF’s projections.
ETFs to watch based on the IMF’s projections:
- iShares MSCI India ETF (BATS: INDA): seeks to track the investment results of the MSCI India Index composed of Indian equities. The index measures the performance of equity securities of companies whose market capitalization, as calculated by the index provider, represents the large and mid-capitalization segments of the Indian securities market.
- Xtrackers CSI 300 China A-Shares ETF (NYSEArca: ASHR): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 300 Index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market. The underlying index includes small-cap, mid-cap, and large-cap stocks.
- SPDR S&P 500 ETF (NYSEArca: SPY): seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index, which is a diversified large cap U.S. index that holds companies across all eleven GICS sectors.
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iShares Core MSCI Europe ETF (NYSEArca: IEUR): seeks to track the investment results of the MSCI Europe IMI. The index is a free float-adjusted market capitalization-weighted index which consists of securities from the following 15 developed market countries or regions: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
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