In the latest World Economic Outlook, the International Monetary Fund said that it now saw the global economy expanding by only 3.2 percent in 2016, which is 0.2 percentage points lower than its January forecast.
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It said a prolonged period of slow growth has left the global economy more exposed to negative shocks and raised the risk that the world will slide into stagnation.
The IMF also readjusted its 2017 outlook for the world economy from three-point-six percent to three-and-a-half percent.
India’s forecast, however, is unchanged and there is even an upgrade for China, reflecting strong growth in the services sector, offsetting the weakness in manufacturing.
As well as the forecast for the U.S. growth being cut to 2.4% versus 2.6% at the start of the year, the eurozone was revised down to 1.5% for this year from 1.7%. This figure stood at 2.8 percent in 2015. The organization made the downward adjustment because decreasing exports for 15 consecutive months caused by the slowing global economy has served as the great risk for the Korean economy.
The downgrade comes as a bit of a surprise after two closely watched economic indicators – monthly GDP and jobs numbers – both posted huge numbers in recent weeks, with the economy having its best month in more than two years in January. Sustaining strong growth over the medium term would require labour market reforms and dismantling of infrastructure bottlenecks, especially in the power sector, it said in its latest World Economic Outlook.
The forecasts for the eurozone remain unchanged, with a growth rate of 1.5% and 1.7% in 2016 and 2017 respectively, while inflation remains at low levels at 0.4% in 2016 to accelerate in 2017 at 1.1%.
According to International Monetary Fund prognoses, Ireland is the only European country to register this year an economic growth higher than that of Romania (5%) while Europe will record an economic growth of 2% and Emerging Europe, which also includes Romania, will have a GDP advance of 3.5%.
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The IMF has downgraded the forecast of economic growth of Armenia for 2016 from 2.2 percent to 1.9 percent.
