The IMF has, in its latest World Economic Outlook (WEO) Update, set out reduced expectations for global growth, with the organisation warning the economy this year will expand at its slowest pace since the financial crisis struck. The report points to a continued slump in emerging markets and weaker prospects all-round for oil-exporting countries.
The hysteria surrounding the Greek debt negotiations and a spike in volatility this August have bred uncertainty among investors
“Global growth remains moderate – and once again more so than predicted a few months earlier,” according to the report. “In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market and developing economies.”
The hysteria surrounding the Greek debt negotiations and a spike in volatility this August have bred uncertainty among investors. “Emerging market and developing economies face a difficult trade-off between supporting demand amid slowing growth – actual and potential – and reducing vulnerabilities in a more difficult external environment.”
This year, should the IMF findings prove accurate, could mark a fifth consecutive year of declining growth for emerging economies. Falling commodity prices, depreciating emerging market currencies and on-going financial volatility have each hampered growth in this area and will continue to do so late into the year. Brazil, Nigeria and Russia are among the worst affected, and the Chinese slowdown has done much to dampen spirits among major exporters.
According to the IMF, global growth for this year is projected at 3.1 percent, 0.3 percent shy of 2014 and 0.2 percentage points less than predicted in July. The outlook is not all doom and gloom, however, and, relative to last year at least, the recovery in advanced economies is expected to gather steam, and global activity is forecast to pick up in the coming year.
