In its turn, the World Bank foresees that Romania’s economic growth rate will accelerate to 4% in 2016, supported by expansionist fiscal policy and labour market reforms, but warns about the risk of Romania’s entering the procedure of excessive deficit.
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In its latest world economic report titled Too Slow for Too Long, the International Monetary Fund downgraded its 2016 forecast for global growth by 0.2 per cent to 3.2 per cent.
It also reflects the most recent release from the Bank of Canada back in January which suggested GDP growth would be around 1.4 per cent during 2016. The lender said Tuesday it expected annualized global growth of 3.2 percent, down from the 3.4 percent it predicted in January.
The IMF forecast the advanced economies to grow 1.9% and 2.0%, respectively, for 2016 and 2017. Besides, the Fund has slightly raised China’s growth to 6.5% in 2016 and 6.2% in 2017.
The Global Economic Outlook report forecasts a growth of 3,2% this year and 3,5 for 2017. In India, lower commodity prices, a range of supply side measures, and a relatively tight monetary stance have resulted in a faster-than-expected fall in inflation, making room for nominal interest rate cuts, but upside risks to inflation could necessitate a tightening of monetary policy, it said.
Global growth is expected to pick up to 3.5 per cent in 2017, however, this is still a downward revision from the IMF’s October 2015 forecast.
Nigeria was hit by the deepest downgrade, to 2.3% from the previous forecast of 4.1% due to the country’s troubles with its oil industry. “The weaker is growth, the greater the chance that the preceding risks, if some materialize, pull the world economy below stalling speed, where demand is insufficient to avoid a low-growth and deflationary equilibrium”.
The Washington institution also upped its outlook for unemployment and expecting 11.6% of the active population to remain out of a job, only fractionally more negative than the government’s outlook of 11.3%.
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Mr Obstfeld said that global growth could easily weaken from the latest International Monetary Fund forecasts which could reinforce a deflationary spiral of weak growth that erodes future output potential.
