Dresdner RCM's global chief economist, Andrew Hunt, has told investors that the attacks on Afghanist...
Dresdner RCM's global chief economist, Andrew Hunt, has told investors that the attacks on Afghanistan are highly unlikely to have any significant direct effects on the world economy.
Hunt argued that even the impact on military budgets and expenditure is likely to be relatively small.
He said: 'While the commencement of hostilities may directly depress consumer sentiment a little, we would not ascribe too much weight to this factor. Instead, we believe consumers will be worried about their job security.
'The uncertainty affecting world markets remains the greatest danger. However, the authorities have shown more willingness than ever before to make policy with that in mind.'
Hunt said that after the long boom in corporate expenditure and the sudden slowing in the world economy, many companies in the US, Japan and Europe have a very real need to raise capital from financial markets.
He added: 'We suspect the increased level of uncertainty of terrorist counter-attacks, the political situation in the Middle East and the oil price will depress investor sentiment and, indirectly, weaken the state of corporate finances. We anticipate that faced with a lack of new capital, the OECD's corporate sector will start to retrench further.'
Despite this, Hunt believes monetary and fiscal reaction from the central authorities in the UK, US and eurobloc will offer a substantial level of support to world economies.
He said: 'We firmly believe central banks are acutely aware of this situation. We expect further interest rate cuts and potentially other forms of monetary stimuli, such as direct asset purchases, that are designed to offer support to both the markets and the wider economy.'
Clarke replacing Balkham
'Deep-dive analysis of client behaviour'
Ways to mitigate April’s increases
The best equity income funds examined