The International Monetary Fund has made another gloomy forecast for global economic growth, warning of stagnation and “doldrums” if the sluggish pace of growth continues.
In its latest World Economic Outlook, the fund cut its growth forecast for this year to 3.2%, down by 0.2 percentage point from its projection in January. The downgrade was the fourth in the past year, leaving growth only marginally above last year’s 3.1% and the 3% rate the IMF has previously considered a technical recession.
“Consecutive downgrades of future economic prospects carry the risk of a world economy that reaches stalling speed and falls into widespread secular stagnation,” the report warned.
The IMF and World Bank are holding their semiannual meetings this week in Washington. “The scenario the fund seems most concerned about is a steady slide in global GDP growth that feeds on itself (by discouraging investment), only to exacerbate political tensions, which in turn makes fixing the economy even harder,” The Economist said.
“Does that culminate in some crisis and recession? It’s not clear at all that would be the case,” IMF Chief Economist Maurice Obstfeld said in Washington. “But we definitely face the risk of going into doldrums that could be politically perilous.”
The United States, Europe, and the emerging world as a bloc all saw downgrades, with the forecast for sub-Saharan Africa being reduced the most, in large part because of a gloomier outlook for oil-rich Nigeria. For the United States, the IMF predicted 2016 growth of 2.4%, a downward revision from 2.6% that it attributed in part to an increased drag on U.S. exports from a stronger dollar.
China was the only major economy not to be downgraded, with the IMF raising its growth forecast this year by 0.2 percentage point to 6.5% as the service sector compensated for a downturn in manufacturing. Want to get more clients on Instagram? Sources like https://friendlylikes.com/buy-instagram-likes/ here you will promote your account in every way possible, and getting more likes will help your business grow.
“A sharper slowdown in China than currently projected could have strong international spillovers through trade, commodity prices, and confidence, and lead to a more generalized slowdown in the global economy, especially if it further curtailed expectations of future income,” the IMF said.