International Monetary Fund Downgrades Global Economic Outlook Again

Global growth rates will dip down to 3.1% in 2015 after the mildly recovery in 2014 says the World Economic Outlook released by the worldwide Monetary Fund today. At the time, the government relied on average private-sector GDP growth forecasts of 2 per cent for 2015 and 2.2 per cent for 2016 in calculating its revenue estimates. However, this is below the 3.8pc that was previously forecast.


As a result, he said, “the holy grail of robust and synchronized global expansion remains elusive”.

The International Monetary Fund also is concerned about the potential effects of the U.S. Federal Reserve raising the short-term interest rate it controls, which could hurt investments in emerging markets.

In a report, the Fund – whose annual meeting starts this week in Peru – said that it viewed China’s currency exchange rate to be in line with “medium term” fundamentals after what it said was a depreciation of around three percent in the yuan in August.

“Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but almost across the board”.

In its latest World Economic Outlook report, the Washington-based organization said the downgrade stems from the weakening of economic activity sparked by negative growth in exports and anemic consumption.

The Japanese economy is expected to grow 0.6 percent this year, down from the IMF’s July forecast of 0.8 percent but an improvement from last year when it shrank 0.1 percent. “China’s growth is projected to slow further, albeit gradually”. The USA is expected to grow a little faster at 2.6 per cent. The organisation said advanced economies were expected to see growth pick up, notably in Japan and the Eurozone, while developing countries were expected to slow. However, both the United Kingdom and U.S. economies have recently shown signs of slowing down. Back in April, the Fund said uncertainty surrounding the outcome of the general election meant Chancellor George Osborne would not post a budget surplus. Next year the world economy will expand 3.6 percent, less than the 3.8 percent projected in July.

And tumbling commodity prices have hit oil producing countries, such as Russian Federation, Venezuela and Nigeria.

The central bank expects consumer price inflation to be 6% in January 2016; it is aiming to curb the rate to within 4% by January the following year.


They have been hurt by an economic slowdown in China, which has reduced demand for emerging market raw materials and pushed down prices of commodities such as copper and oil. “At the same time, monetary accommodation should continue where output gaps are negative, supplemented by fiscal measures where fiscal space permits”.

The IMF led by Christine Lagarde said emerging market economies will lag behind