IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH

IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH

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IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH

– IMF Forecasts Fall in Global GDP Growth

– Remedy Realistic in the Face of Loose Monetary Policy

IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH

The International Monetary Fund (IMF) has again outlined another downward revision to its prediction for global GDP growth. According to the institution’s latest updates, it is likely that the next revision will again be down.

This forecast update is nevertheless resolutely downbeat, as given by the IMF’s Chief Economist Maurice Obstfield. One of the big threats to the world economy, he said, is from “non-economic risks fund for grubby politics. A world economy stuck in the doldrums, he cautioned, may be a perilous place politically.

IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH
Maurice Obstfield, IMF Economist

According to The Economists, the actual forecasts are far from horrible. IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTHThe fund nudged down its estimate of global growth for 2016 from 3.4% to 3.2%. That is still a shade faster than in 2015.

The revisions are broad-based: America, Europe and the emerging world as a bloc all saw similar downgrades. The forecast for sub-Saharan Africa was pared back the most, in large part because of a gloomier outlook for oil-rich Nigeria, the continent’s biggest economy.

The recent recovery in crude prices will take some pressure off oil producers, but “we won’t be seeing prices at the $100 a barrel level for some time, if ever.” Mr Obstfeld claimed.

IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH

Among the countries with large economy, only China escaped a downgrade. But there is a concern about the quality of China’s growth, Mr Obstfeld did say, as fresh credit is directed towards sputtering industries.

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However, the IMF has some familiar remedies for the global economy: keep monetary policy loose, augment it with fiscal stimulus where possible and add some pro-growth reforms to the mix.

IMF TO RECORD ANOTHER DOWNWARD REVISION OF GLOBAL GDP GROWTH

Such action is needed to insure against the risks the fund identifies. But the world should also be making contingency plans for a coordinated response if a financial shock hits. “There is no longer much room for error.” With certain weariness, Mr Obstfeld stated.