IMF Slashed Global Economy Growth Forecast
IMF has predicted global growth of 3.2% for the yearÂ 2016 and 3.5% for 2017. IMF chief economist, Maurice Obstfeld, described the growth phase very disappointing. This downgrade reflects the widespread slowdown across all type of economies. He also mentioned that the global economy is now exposed more to risks which are negative in nature. Before releasing the latest report, where they downgraded the growth outlook, IMF did expect global growth of 3.4% for the current year and 3.6% for 2017.
It is a second consecutive time in a year where IMF downgraded global economic growth forecast and it was a repeat of their previous forecasts since only a year back the prediction for 2016 was 3.8%.
The major downgrade of all time was for Nigeria whose economy has been severely hit by the falling price of crude oil and all other countries who are dependent on crude oil like Russia, Brazil also anticipating weaker performance than previously anticipated.
On a bright note, they have upgraded the growth forecast for China which is now showing faster recovery in services sector and thereby offsetting the weakness of manufacturing sector and also didnâ€™t change the forecast for Indiaâ€™s growth outlook.
IMF guys are seriously concerned about the lackluster nature of global economy which is still continuing to recover from the financial crisis and recession occurred because of that.
Christine Lagarde, IMF chief has already described the state of current economy as â€œvery averageâ€ and subtitled new report as â€œToo slow for too longâ€
It cautions of dangers that could prompt results more regrettable than the fundamental estimate.
One risk highlighted is an arrival of the money related business sector turmoil that hit the world before in the year. China’s endeavors to move the national economy more towards buyer spending and administrations are portrayed as something that will in the end advantage for China itself and the world.
In any case, given the nation’s critical part in world exchange, “knocks along the way” could be harming for others. There is a notice about “the worldwide effect of the loosening up of earlier abundances in China’s economy as it moves to a more adjusted development way following 10 years of solid credit and speculation development”.
There is likewise a worry that determined moderate development could diminish the limit for further development later on. There is a danger, the report says, of the world economy falling into broad stagnation.
IMF also stressed that there are couple of nations where the monetary movement will go slow. Countries like Greece and Brazil are hindered by far-reaching political emergency and see their economy shrink by 3.8%, the same as one year ago. Russia, another nation which has been stucked by low crude oil price and western pressure due to circumstance in Ukraine.