Global growth:
IMF cuts forecasts for 2015 again
The IMF is cutting its global growth forecast to 3.1 percent from 3.3
percent, with the biggest cuts to Brazil and Russia, reports Sara Eisen.
The International Monetary Fund (IMF) has trimmed its expected global
growth forecasts for 2015 again and has warned that downside risks to
the global economy appear "more pronounced." Global growth for 2015 is
projected at 3.1 percent, down 0.2 percentage points from its July
forecast for 3.3 percent growth, according to the IMF's latest World
Economic Outlook (WEO) report.
It cited weaker growth prospects for emerging economies, including
China, and a decline in commodity prices as a reason for the revision.
The report published last week, said that global growth "remained
uneven" with developed economies and emerging markets facing diverging
outlooks.
As such, "downside risks to the world economy appear more pronounced
than they did just a few months ago," it added.
"Relative to last year, the recovery in advanced economies is
expected to pick up slightly, while activity in emerging market and
developing economies is projected to slow for the fifth year in a row,
primarily reflecting weaker prospects for some large emerging market
economies and oil-exporting countries," it said.
"In an environment of declining commodity prices, reduced capital
flows to emerging markets and pressure on their currencies, and
increasing financial market volatility, downside risks to the outlook
have risen, particularly for emerging market and developing economies."
Such global factors and country-specific developments pointed to a
somewhat weaker recovery in 2015 and 2016 than previously envisaged, the
IMF said. The weaker forecast illustrates the steady decline in optimism
at the Washington-based organization; in April the IMF had predicted
global growth of 3.5 percent this year.
The report warned that the revised global growth forecasts
"underscore the challenges all countries face" although it singled out
emerging economies as those facing medium and long-term "common forces,"
and low productivity growth and high debt levels in emerging markets,
specifically, the IMF believed that the downturn in commodity prices and
a "growth realignment in China" were key problems for developing
economies' growth outlooks.
"In countries outside the advanced economies, the sources of slower
growth are diverse, ranging from commodity price declines (which are
also affecting a few advanced economies adversely), to overhangs from
past rapid credit growth, to political turmoil."
The report comes amid a sharp oil price decline since June 2014 when
a barrel of oil fetched $114. Today, that same barrel costs below $50.
Moreover, metal prices have also fallen on concerns over global demand,
particularly following the slowdown in China.
Emerging markets should concern us all as they "account for a growing
share of world output and will still account for the lion's share of
world growth," the IMF said. It wasn't all bad news for emerging
markets, however, as the IMF did forecast a pickup in growth in 2016.
"Growth in emerging market and developing economies is projected to
rebound in 2016. This reflects mostly a less deep recession or a partial
normalization of conditions in countries in economic distress in 2015
(including Brazil, Russia, and some countries in Latin America and in
the Middle East), spillovers from the stronger pickup in activity in
advanced economies, and the easing of sanctions on the Islamic Republic
of Iran. China's growth is projected to slow further, albeit gradually."
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