DUSHANBE, January 20, 2015, Asia-Plus — The International Monetary Fund (IMF) has lowered its forecast for global economic growth for this year and next.
The IMF now expects growth of 3.5% this year, compared with the previous estimate of 3.8% which it made in October.
The growth forecast for 2016 has also been cut, to 3.7%.
The downgrade to the forecasts comes despite one major boost for the global economy – the sharp fall in oil prices, which is positive for most countries.
The IMF expects that to be more than offset by negative factors, notably weaker investment.
That in turn reflects diminished expectations about the growth prospects for many developed and emerging economies over the next few years.
The eurozone is a case in point. The IMF does expect the recovery there to continue, but not strongly. It is estimating growth of 1.2% in the euro area this year and 1.4% in 2016.
The slowdown in China is another factor behind the revised forecasts. Official figures showed on January 20 that China”s growth slowed to 7.4% last year, from 7.7% in 2013.
Next year, the IMF growth forecast for China is 6.3%, compared with an average of 10% over the three decades up to 2010.
According to the report, the sharpest downgrade of all is for Russia, which is forecast to see its economy contract by 3% this year and 1% next. That is the result of the fall in oil prices and what the report calls increased geopolitical tensions – in other words, the crisis in Ukraine and Western sanctions on Russia.
