“””(But) for the most part, it was a series of accidents… and the rest of the year should not be very much affected”, Olivier Blanchard, the IMF’s chief economist, said in a press conference. “We have to be ready to see other episodes of that kind”.
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Because of the setback, the International Monetary Fund lowered its growth forecast for the United States, the world’s largest economy, by 0.6 per centage point to 2.5 per cent, and for Canada, by 0.7 point to 1.5 per cent.
“As the International Monetary Fund said today, the Canadian economy will grow this year”.
Authorities have fewer options left to respond to downside surprise: Governments have pushed debt to dangerously high levels and central banks are constrained by the lower limits of interest-rate reductions. “But, for the moment, the slowdown in growth is primarily led by a slowdown in real estate investment, a development we see as basically desirable”, Blanchard said.
Still, the quarterly forecast was largely upbeat despite the Greek debt crisis and China’s financial market turmoil.
Global economic growth will be lower than previously expected the world’s financial watchdog said.
“Market fluctuations, including further strengthening in the USA dollar could set off rapid, destabilising swings in investment flows to developing and emerging economies”, the report said.
“It is likely the economy was in recession in the first half of the year”, said TD senior economist Randall Bartlett.
The global lending agency cut its 2015 growth outlook for advanced economies from 2.4 percent to 2.1 percent, with the estimate for emerging markets dipping to 4.2 percent from 4.3 percent.
China’s current stock market plunge is a concern, but not a major one. In addition, the organisation warned that the uncertainty in Greece and re-balancing in China pose risks to the outlook. Much of the distress in the Canadian economy is focused on the energy sector. But he says he is still encouraged by signs of positive job growth. This implies that growth in oil production in the United States will slow faster than redicted.
The Fund repeated its call for advanced economies with room to borrow to boost infrastructure spending.
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On Thursday, TD Bank also cut its expectations for individual provinces, but noted sharp regional differences. The fallout from Greece’s credit crisis is hard to predict, and could escalate if it drops out of the eurozone, and China’s stock market crash has already sent shock waves through global commodity markets. But if it deteriorates further, it could hit broader European growth, which could weigh on the US recovery.
