Global growth more sluggish than expected says IMF

Forecasts for 2020 are scaled down amid trade tensions

                                

Growth in the global economy is unlikely to hit the 3.4 per cent forecast by the International Monetary Fund (IMF) in October 2019. Trade tensions and a sluggish performance in developed economies have led the IMF to revise its predictions downwards, it said in a report.

The IMF forecast a global growth rate of three per cent for 2019 and 3.4 per cent for 2020. It has now revised the forecast down to 2.9 per cent for last year and 3.3 per cent for this year.

The biggest concerns were over trade tensions, particularly between the US and China, which are ongoing and unresolved. The IMF says there is also no indication that the current sluggish trend globally is likely to be resolved in the short term. Economic growth in India, which has helped to drive overall growth forward, was lower than expected in 2019.

“The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilises at close to current levels,” said Gita Gopinath, the IMF’s chief economist, in a press statement.

Overall, risks to growth are lower since the UK General Election reduced Brexit uncertainty and some progress had been made in the talks between the US and China, the IMF said. However, it warned that there was still the potential for tensions between the US and the European Union, and that the threat of another round of trade disputes between the US and China had not gone away.

FURTHER READING: Eurozone growth set to slow

FURTHER READING: IMF slashes forecast for global growth to lowest since 2008

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