IMF revises global economic growth projection downwards

The International Monetary Fund (IMF) has downgraded its global economic growth forecast to 3.1 per cent and warned of rising debt levels in emerging economies, in a new report.

Down from the global real GDP growth of 3.4 per cent last year, IMF forecasts 3.1 per cent growth in 2015 and an improvement to 3.6 per cent next year.

In its World Economic Outlook report, which is released twice a year before its Spring and annual meetings, the IMF projects growth in low-income and developing countries at 4.8% in 2015, down from 6% in 2014.

Sub-Saharan growth is projected at 3.8 per cent in 2015 and 4.3 in 2016.

The IMF’s Managing Director, Christine Lagarde is reported to have described global growth as “disappointing and uneven” in her annual pre-meetings speech, calling for policy changes to address pressing economic challenges and expressing concern over foreign debt in emerging markets.

According to the IMF, almost 50 countries around the world currently face worrying levels of debt distress.

The World Economic Outlook report says the slowing growth reflects a combination of factors such as adjustment in the aftermath of credit and investment booms, the fall in commodity prices and the resulting weaker outlook for oil and other commodity exporters, as well as China’s economic slowdown and reduction in reliance on commodity-intensive investment.

According to Maurice Obstfeld, the IMF Economic Counsellor and Director of the Research Department said the forecasts “reflect a world economy that is at the intersection of at least three powerful forces”:

“First, China’s economic transformation – away from export and investment-led growth and manufacturing, in favour of a greater focus on consumption and services; second, and related, the fall in commodity prices; and third, the impending increase in US interest rates, which can have global repercussions and add to current uncertainties.”

By Emmanuel Odonkor