Brown Brothers Harriman’s (BBH) Elias Haddad points to upcoming IMF publications as key for assessing global risks. The World Economic Outlook is expected to show downgraded growth projections, while the Global Financial Stability Report and Fiscal Monitor will focus on sovereign debt sustainability. BBH warns that an energy shock could evolve into a fiscal shock as higher borrowing costs hit stretched public finances.

IMF reports highlight fiscal vulnerabilities

"The IMF releases its closely watched World Economic Outlook on Tuesday."

"IMF chief Kristalina Georgieva flagged last week that global growth will be downgraded, even under the most hopeful scenario of a swift normalization to the energy shock."

"Georgieva also warned that the world has a fiscal space problem reflecting growing public debt and rising interest payments."

"Indeed, we previously highlighted that a key risk facing financial markets is that the energy shock morphs into a fiscal shock as higher borrowing costs collide with already stretched public finances, while sovereign debt is increasingly held by price-sensitive hedged funds."

"The IMF’s updated Global Financial Stability Report (Tuesday) and Fiscal Monitor (Wednesday) should offer a timely assessment around sovereign debt sustainability."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)