World Economic Outlook Update: Subdued Demand, Diminished Prospects-IMF
World Economic Outlook Update, January 2016: Infographics “Future Grwoth Rates
By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) has said that pickup in global growth is weak and uneven across economies, with risks now tilted towards emerging economies and has revised down forecast to 3.4 percent in 2016 and 3.6 percent in 2017, according to its latest World Economic Outlook (WEO) Update.
The Fund says overall, forecasts for global growth have been revised downward by 0.2 percent for both 2016 and 2017. “These revisions reflect to a substantial degree, but not exclusively, a weaker pickup in emerging economies than was forecast in October,” the IMF said.
According to the Outlook, in advanced economies, a modest and uneven recovery is expected to continue, with a gradual further narrowing of output gaps. “The picture for emerging market and developing economies is diverse but in many cases challenging,” the IMF said.
“This coming year is going to be a year of great challenges and policymakers should be thinking about short-term resilience and the ways they can bolster it, but also about the longer-term growth prospects,” said Maurice Obstfeld, IMF Economic Counsellor and Director of Research.
”Those long-term actions will actually have positive effects in the short run,” he added.
The Outlook says the slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in some large emerging market economies will continue to weigh on growth prospects in 2016–17.
“The projected pickup in growth in the next two years— despite the ongoing slowdown in China—primarily reflects forecasts of a gradual improvement of growth rates in countries currently in economic distress, notably Brazil, Russia, and some countries in the Middle East, though even this projected partial recovery could be frustrated by new economic or political shocks,” the IMF affirmed.
According to the WEO, risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalised slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the United States.
IMF says if these key challenges are not successfully managed, global growth could be frustrated by new economic or political shocks.
It affirmed that risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalised slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the United States. “If these key challenges are not successfully managed, global growth could be derailed,” the IMF noted.
According to the report, in advanced economies, growth is projected to rise by 0.2 percent in 2016 to 2.1 percent, and hold steady in 2017. “Overall activity remains resilient in the United States, supported by still-easy financial conditions and strengthening housing and labour markets, but with dollar strength weighing on manufacturing,” the IMF affirmed.
In emerging market and developing economies, the IMF says growth is projected to increase from 4 percent in 2015—the lowest since the 2008–09 financial crisis—to 4.3 and 4.7 percent in 2016 and 2017, respectively.
While most countries in sub-Saharan Africa will see a gradual pickup in growth, but with lower commodity prices, to rates that are lower than those seen over the past decade. “This mainly reflects the continued adjustment to lower commodity prices and higher borrowing costs, which are weighing heavily on some of the region’s largest economies (Angola, Nigeria, and South Africa) as well as a number of smaller commodity exporters,” the report added.
