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Gita Gopinath warns US equities’ record global exposure could trigger a more severe worldwide impact than the dot-com crash.
File photo of Gita Gopinath.
Harvard University professor and former IMF Chief Economist Gita Gopinath on Thursday said the global exposure to US equities is at record levels, and warned that a stock market correction would have more severe and global consequences as compared to what followed the dot-com crash.
“The exposure of the world to US equities is at record levels. A stock market correction would have more severe and global consequences as compared to what followed the dot-com crash. The tariff wars and lack of fiscal space compounds the problem. The underlying problem is not ‘unbalanced trade’ but ‘unbalanced growth.’ There is a need for higher growth and returns in more countries/regions of the world, not just in the US,” said Gopinath in an article for the magazine The Economist.
Gopinath was the IMF’s first deputy managing director between 2022 & 2025, and chief economist between 2019 & 2022. Currently, she is Gregory and Ania Coffey Professor of Economics at Harvard University.
IMF Warns Rising Risks To Global Financial Stability
US equities are trading 46 per cent premium to global peers, with 22x forward earnings. IMF’s model suggest that this lacks fundamental justification
The IMF, in its biennial Global Financial Stability Report, October 2025has warned about rising risks to global financial stability. According to the report, valuations of some risk assets have once again stretched after a brief correction, the US dollar has depreciated by 10 per cent so far, and debt is increasingly shifting toward the government sector—some of the key concerns highlighted by the IMF.
IMF added that investors have grown “too complacent” about rising risks, even as asset prices trade “well above fundamentals”.
What Is Dot-Com Bubble Crash?
At the onset of world wide web or colloquially internet , during late 1990s and early 2000s, valuations of several company stocks had galloped at stratospheric levels despite having little or no profits. Investors were pouring money into these internet-based stocks at freakish pace, betting on rapid growth. But the bubble was exploded in 2000, leading to the crash of market and erasing of trillions of dollars in market value.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
October 16, 2025, 12:14 IST
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