The IMF has downgraded its global growth forecast for this year, citing the US slowdown as the most significant factor in what could prove the slowest year since the world economy contracted back in 2009. The IMF clipped its previous forecast by 0.2 percentage points to 3.3 percent and revised its estimate for the world’s number one economy also, down to 2.5 percent from 3.1 percent previously.
[T]he IMF’s chief economist Olivier Blanchard attributed a weak US performance mostly to “a series of accidents”
“The shortfall reflected to an important extent an unexpected output contraction in the United States, with attendant spillovers to Canada and Mexico. One-off factors, notably harsh winter weather and port closures, as well as a strong downsizing of capital expenditure in the oil sector contributed to weakening US activity,” according to the IMF outlook.
The document went on to add that demand support and structural reforms were key focal points on a global front, and, in advanced economies, accommodative monetary policy could do much to raise both economic activity and inflation. An enduring low growth climate underlines the fragility of the global economy still, though, in a press conference held after the announcement, the IMF’s chief economist Olivier Blanchard attributed a weak US performance mostly to “a series of accidents.”
Assuming there are no more “one-off factors”, the US should play out the rest of the year on a relatively positive note, and another contraction before the year’s end is unlikely.
Elsewhere, the IMF maintained its 1.5 percent forecast for the eurozone, despite the situation in Greece, and China’s 6.8 percent forecast was also unchanged, despite stock market volatility of late. In 2016, growth is expected to strengthen and reach a far healthier 3.8 percent.
