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IMF says the global economic expansion is losing momentum
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Loading...The International Monetary Fund (IMF) revised down its estimates for global growth on Monday, warning that the expansion seen in recent years is losing momentum.
The Fund now projects a 3.5 percent growth rate worldwide for 2019 and 3.6 percent for 2020. These are 0.2 and 0.1 percentage points below its last forecasts in October — making it the second downturn revision in three months.
"Global growth is expanding at a healthy rate, but we are seeing a slowing momentum," IMF Head of Research Gita Gopinath said in the release, adding there were "many important down-side risks to the global economy."
In October, the IMF cut its global growth forecasts on the back of increased trade tariffs between China and the United States. It said the latest revision is due in part to carry over from last year, mentioning weakness for German auto manufacturers due to new fuel emission standards, and soft domestic demand in Italy after recent sovereign and financial risks. But the IMF also highlighted weakening sentiment in the global financial markets and a contraction in Turkey that's now projected to be deeper than anticipated.
According to the Fund, advanced economies have been on a declining path in terms of growth and this is taking place more rapidly than previously thought. These countries are forecast to grow 2 percent this year and 1.7 percent in 2020.
At the same time, there's also been a growth slowdown in emerging economies. The IMF projects a 4.5 percent growth rate in 2019, from 4.6 percent in 2018, before improving to 4.9 percent in 2020.
Triggers for further downgrades
There are also a number of flashpoints that could lead to even lower growth trajectories across the world, the IMF added in its new report on Monday, released just as the World Economic Forum in Davos, Switzerland kicks off.
"A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given high levels of public and private debt," it said.
These potential triggers include a "no-deal" Brexit for the U.K. and a deeper-than-envisaged slowdown in China.
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