The IMF has lowered its forecast for the world economy growth to 3.2% in 2016

Almaty. April 13. Silkroadnews – Global growth continues, but at a sluggish pace that leaves the world economy more exposed to risks, says the IMF’s latest “World Economic Outlook” (WEO).

“The WEO forecasts global growth at 3.2% in 2016 and 3.5% in 2017, a downward revision of 0.2% and 0.1%, respectively, compared with the January 2016 Update,” the statement says.

According to January WEO bulletin, the global growth was projected at 3.4% in 2016 and 3.6% in 2017.
The report says that growth in advanced economies is projected to be modest and make about 2%. The recovery is hampered by weak demand, partly held down by unresolved crisis legacy, as well as unfavorable demographic dynamics and low rates of productivity growth.

In the US, growth is expected to remain unchanged at 2.4% with a slight increase in 2017. The economic growth in the euro zone is negatively affected by low investment, high unemployment and weak balance sheets, thus, the growth is projected to remain at low level of 1.5% this year and 1.6% next year.

In Japan, both growth and inflation were lower than expected, particularly due to a sharp drop in private consumption. The forecast says growth will remain at 0.5% in 2016 and with turning slightly negative to -0.1% in 2017, as the planned increase in the consumption tax rate becomes effective.

In emerging markets and developing countries growth prospects for 2016 remain uneven and generally weaker than over the past twenty years. The WEO projects slight increase for these countries compared to 2015 - up to 4.1% this year and 4.6% next year.

China’ economy growth could be substantially lower versus the targets set by the country’s authorities yet higher compared to the IMF January forecasts: 6.5% in 2016 and 6.2% in 2017.

“In general the slowdown goes according to the earlier forecasts, though fall in imports and exports is more active than it was expected,” the experts note.

According to the report, more aggressive policy to lift demand and supply potential could foster stronger growth in both the short and longer term.

The WEO emphasizes a three-pronged approach of mutually reinforcing policy levers comprising of: structural reforms; fiscal support, with growth-friendly composition of revenue and spending, and fiscal incentives, if necessary and allowed by fiscal space; and measures of monetary policy. It is critically important, the report stated, to further strengthen the financial sector to create an environment under which the monetary, fiscal and structural policies could be the most effective.