The International Monetary Fund (IMF) Cut Its World Growth Outlook
The global economy will expand 3.4% this year, down from a projected 3.6% in October. Growth for 2017 has been revised to 3.6% from 3.8%.
According
to the report: There are important risks to the outlook, which are
particularly prominent for emerging market and developing economies and could
stall global recovery.
These
risks relate mostly to the ongoing adjustments of the global economy, namely
China’s rebalancing, lower commodity prices, and the prospects for the
progressive increase in interest rates in the United States. They include the
following possibilities:
• A
sharper-than-expected slowdown in China, which
could bring more international spillovers through trade, commodity prices, and
waning confidence.
• A
further appreciation of the dollar and
tighter global financing conditions which could raise vulnerabilities in
emerging markets, possibly creating adverse effects on corporate balance sheets
and raising funding challenges for those with high dollar exposures.
• A
sudden bout of global risk aversion,
regardless of the trigger, could lead to sharp further depreciations and
possible financial strains in vulnerable emerging market economies.
• An
escalation of ongoing geopolitical tensions in
a number of regions, which could affect confidence and disrupt global trade,
financial flows, and tourism. New economic or political shocks in countries
currently in economic distress which could also derail the projected pickup in
activity.
Commodity
markets pose two-sided risks. On the downside, further declines in commodity
prices would worsen the outlook for already-fragile commodity producers, and
widening yields on energy sector debt threaten a broader tightening of credit
conditions.
On
the upside, the recent decline in oil prices may provide a stronger boost to
demand in oil importers, including through consumers’ possible perception that
prices will remain lower for longer.
“All
in all, there
is a lot of uncertainty out there, and I think that contributes to the
volatility,” said IMF chief economist Obstfeld. “We may be in for a bumpy ride
this year, especially in the emerging and developing world,” he said.
More on this and plenty of other things to discuss today on our weekly webinar.
We will post the recorded version at or about 5pm (EDT) on our website:
So feel free to tune in!!
No comments:
Post a Comment