IMF cuts growth forecasts for world economy
The International Monetary Fund (IMF) has cut its global growth forecasts predicting a weaker-than-expected recovery this year and next year.
The Washington-based fund warned a pan-global recovery remained elusive, with recovery moderate and uneven. It is predicting global growth this year of 3.1pc, down 0.3 percentage points.
Six years after the world emerged from a financial crisis and recession, the deteriorating picture showed a global recovery that’s uneven still from Australia to Germany. Brazil and Russia’s economies are contracting, Japan and the Eurozone are struggling to impress, and long-time growth engine China is slowing down.
The impending hike in US interest rates, the transformation in China’s economy from export led growth to a greater focus on consumption and a fall in commodity prices are behind the forecasts, the IMF said.
Below par growth is expected over the coming years thanks to a combination of low investment and weak productivity growth, the body said in its latest World Economic Outlook released today.
Ireland bucks the trend, however, with the IMF upgrading its forecast for GDP growth here for this year by 0.8 percentage points to 4.8pc, compared with its assessment in June.
That's conservative, however, compared with the 6.2pc forecast by Finance Minister Michael Noonan.
“Six years after the world economy emerged from its broadest and deepest post-war recession, the holy grail of robust and synchronised global expansion remains elusive,” said Maurice Obstfeld, the IMF Economic Counsellor and Director of the Research Department.
“Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board.
“Moreover, downside risks to the world economy appear more pronounced that they did just a few months ago.”
The IMF is forecasting global growth of 3.1pc this year, speeding up to 3.6pc in 2016. Global GDP growth was 3.4pc last year.
The IMF said the forecasts reflect a world economy that is at the crossroads of at least three powerful forces, including China’s transformation away from export and investment led growth and manufacturing, in favour of a greater focus on consumption and services.
The Fund also blames the fall in commodity prices, which is linked with the recent Chinese turmoil, as well as the impending US interest rate hike.
Advanced and emerging economies will enjoy mixed fortunes.
In advanced economies, the IMF is predicting a moderate growth pick-up this year relative to last, notably in the United States and Eurozone.
Japanese growth, however, is faltering after a strong first quarter. Advanced economies grew at a 1.8pc rate last year, but will grow by 2pc this year, accelerating to 2.6pc in 2016.