Global growth for 2015 is projected at 3.1 per cent, 0.3 percentage points lower than in 2014 and 0.2 percentage points below forecasts made in the July 2015 WEO Update.
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The body said that “the risks of an outcome worse than its forecasts are more pronounced than they were just a few months ago”.
China having unrolled fiscal measures and its infrastructure investments are the main reasons for the economic growth this year, according to the report.
The global finance body said emerging and developing economies still account for what it called the “lion’s share of global growth”, but maintained such economies are slowing, in 2015, for the fifth consecutive year.
The IMF also forecasts a sharp deceleration in growth among emerging markets, as commodity prices continue to plummet.
The Fund, whose annual meeting starts in Peru this week, forecast that the world economy would grow at 3.1 percent this year and by 3.6 percent in 2016.
On the other hand World Bank was the only organization to retain the growth estimates projecting a 7.5 per cent growth in figures released on Sunday. The IMF downgraded its forecast for the Canadian economy by half a percentage point to 1.5 percent this year.
The Fund expects the Federal Reserve to start raising rates this year, although it expects the central bank to stay its hand until it sees signs of inflation rising towards its two percent target. “Recent market developments such as slumping commodity prices, China’s bursting equity bubble and pressure on exchange rates underscore these challenges”.
In its report published Tuesday, the organization said that global growth “remained uneven” with developed economies and emerging markets facing diverging outlooks.
Growth in advanced economies is projected to increase modestly this year and next.
“There are risks of a stronger growth slowdown if the macroeconomic management of the end of the investment and credit boom of 2009-12 proves more challenging than expected”, the multilateral agency said.
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“Without the implementation of policies to ensure successful normalisation [of interest rates from record lows], potential adverse shocks or policy missteps could trigger an abrupt rise in market risk premiums and a rapid erosion of policy confidence”, the IMF said.
