IMF Downgrades Global Growth Forecast

Posted on 04/09/2019 2:43 PM

The International Monetary Fund (IMF) cut its global growth forecast for 2019 to 3.3% from 3.5%. That compares to global growth of 3.6% in 2018. In a related blog post, IMF explains “The escalation of U.S./China trade tensions, needed credit tightening in China, macroeconomic stress in Argentina and Turkey, disruptions to the auto sector in Germany, and financial tightening alongside the normalization of monetary policy in the larger advanced economies have all contributed to a significantly weakened global expansion, especially in the second half of 2018,” adding that this weakness is expected to persist into the first half of 2019. IMF says the downward revision is “broad-based” and reflects negative revisions for several major economies, including the euro area, Latin America, the U.S., the U.K., Canada and Australia.

It expects growth to improve the second half of the year amid an increase in policy accommodation by major economies, “made possible by the absence of inflationary pressures.” Global growth will likely return to 3.6% in 2020, according to IMF, though it warns the recovery is “precarious” and hinges on a rebound in emerging market and developing economies.

 Beyond 2020, IMF expects global growth to stabilize around 3.5%.

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