Growth in emerging economies is forecast at 4.1 per cent in 2016 and 4.6 per cent in 2017, due to China’s slowdown, effects of oil price decline to exporters, and the weak outlook for commodity prices.
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In February, the world’s top 20 economies listed Brexit as a global risk after lobbying from Mr Osborne, officials from Group of 20 countries said.
“Growth has been too slow for too long”, International Monetary Fund chief economist Maurice Obstfeld said in remarks prepared for a press briefing. David Cameron said it showed that “leaving the European Union would pose major risks for the United Kingdom economy” and chancellor of the exchequer George Osborne described it as the clearest independent warning yet of the danger posed by Brexit. The American economy slowed sharply at the end of 2015, hampered by a strong dollar that hurt US exports.
The UK’s growth is expected to slow to 1.9% in 2016 from the 2.2% growth previous year, before bouncing back to 2.2% in 2017.
One bright spot: The IMF upgraded its China growth forecasts by 0.2 percentage point for this year and next, following signs of “resilient domestic demand” and growth in services that offset weakness in manufacturing.
That is worse than a January projection of 3.6 percent for each year. In January, they thought the global economy would grow 3.4 percent this year, but they ratcheted that down to 3.2 percent in the latest version of their World Economic Outlook.
The fund also cut its global growth projection for the current year, citing increased uncertainty.
British finance minister George Osborne, who has a warm relationship with IMF Managing Director Christine Lagarde, said the Fund’s comments reinforced the case for staying.
The IMF survey also said that financial risks will become more prominent, together with geopolitical shocks and political discord. This brings the forecast more in line with the Office for Budget Responsibility’s (OBR) 2% growth forecast for 2016.
JAPAN: The IMF halved its forecast for Japanese growth this year – to 0.5 percent – despite aggressive monetary policy that has turned Japan’s interest rates negative.
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It warned the country of the economic effects of aging, saying that “Population aging is increasingly weighing on potential growth in these economies, most notably in Korea and Singapore”.
