These projections, nevertheless, are 0.2 percent lower since the IMF’s projections given in July, with Obstfeld restating that downside risks are high and that these numbers could yet be lowered.
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The developed economies are expected to manage slightly stronger growth than before, reflecting the modest recovery in the eurozone and the return of growth in Japan, though that looks tentative at best.
“We are still going to pursue the 5.3 percent growth target stated in the budget”, he said after attending a meeting at the House of Representatives.
In an update to its World Economic Outlook, the International Monetary Fund cut its global growth forecast 0.2 percentage points to 3.1 percent for 2015 and to 3.6 percent for 2016.
For emerging economies, the International Monetary Fund stressed the need for swift structural reforms and measures to stimulate growth.
Jose Vinals, IMF’s financial counselor, warned that the cost for China’s failure to properly handle its policy to implement a more market- and consumption-based economic model could be a huge three percent of global output.
Growth prospects in emerging markets and developing economies vary across countries and regions and is projected to register an overall decline from 4.6% to 4%. But as China began to slow earlier in the decade, many commodity prices turned downwards, starting in the second half of 2011, and their fall has accelerated recently. IMF Managing Director Christine Lagarde said Tuesday that she “hopes and prays” for Venezuela to regain its footing, but said the fund’s outlook is hampered by the lack of information from authorities, who haven’t published price or growth data since past year.
It advised emerging markets to be ready for the USA to hike interest rates, urged advanced economies to address “crisis legacies” and suggested nations consider the “compelling” case for public infrastructure investment at a time of very low long-term interest rates.
The report comes amid a sharp oil price decline since June 2014 when a barrel of oil fetched $114.
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“It also helps bring down inflation”, the official said. “We project a rebound for next year, with 4.5 percent growth in emerging and developing economies, with a further pick-up in subsequent years”, said Obstfeld, adding that this would reflect “a gradual normalization of conditions” in Brazil and Russian Federation.
