IMF Cuts Global Growth Forecasts for 2019, 2020

The IMF has released its forecast for global growth in 2019 and 2020. The report downgraded global growth compared with the April report, but raised the forecast for the United States, the UK and the eurozone.
Kenny Fisher

IMF Revises Growth Forecast for 2019, 2020

The International Monetary Fund (IMF) has released its growth forecasts for 2019 and 2020, and the findings will likely dampen the holiday spirit. The IMF has revised its forecast for global growth in 2019 downwards, from 3.3% in April to 3.2%. For the year 2020, the IMF has lowered the global growth forecast from 3.6% to 3.5%.

In the December report, the IMF warned that global growth “remains subdued” and listed a number of factors contributing to this situation. These include weaker global demand, a decline in global trade and low inflation levels. The IMF noted that the U.S-China trade war and Brexit had dampened global activity, with business spending and manufacturing particularly hit hard. Inflation levels have consistently fallen short of their targets in the United States, Japan and the eurozone.

“The principal risk factor to the global economy is that adverse developments – including further US-China tariffs, US auto tariffs, or a no-deal Brexit – sap confidence, weaken investment, dislocate global supply chains, and severely slow global growth below the baseline,” the IMF report noted.

The IMF highlighted downside risks to the global economy, which include trade tensions, geopolitical hot spots and disinflationary pressures. Another downside risk is that of climate change. The IMF noted that the climate crisis is not only a serious concern for the health and livelihood of individuals, but has become a serious threat to global economic activity.

For advanced economies, the IMF had better news, as the December report revised upwards the April growth forecast. Growth in the eurozone is projected at 1.3% in 2019 and 1..6% in 2020, which is 0.1% higher than the April forecast. For the U.K, the growth forecast is 1.3% in 2019 and 1.4% in 2020, which is also 0.1% higher than the April forecast. Most notable is the U.S. forecast – growth in 2019 is expected at a 2.6% clip, compared to 2.3% in April, which is the result of a stronger than expected first quarter. However, U.S growth is expected to dip to 1.9% in 2020. As for emerging economies, the December report has lowered the April growth forecasts, as weak global growth continues to weigh on the economies of developing nations.

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