Published: Wed, April 10, 2019
Money | By Ralph Mccoy

International Monetary Fund cuts 2019 global growth outlook to 3.3% from 3.5%

International Monetary Fund cuts 2019 global growth outlook to 3.3% from 3.5%

Global growth is forecast to slow to 3.3% in 2019 from 3.6% in 2018 with a the Reserve Bank of India's threshold of 4% in the current fiscal at 3.9% and marginally exceed at 4.2% next year.

The WEO noted 3.3 percent expansion is "still reasonable", but warned the outlook for many countries is still "challenging" given the potential for trade disputes to flare up.

For the United States, IMF economists downgraded their growth forecast for this year to 2.3 per cent from 2.9 per cent in 2018.

The EU's economic growth is already slowing substantially, and the slowdown accounted for much of the reduction in the global growth forecast.

If 25% tariffs were imposed on all trade between the world's two largest economies, US GDP would fall by up to 0.6% and China's would fall by up to 1.5%, the International Monetary Fund said. Growth in systemic economies such as the euro area and China may surprise on the downside, and the risks surrounding Brexit remain heightened.

"The medium-term growth forecast incorporates continued strong investment growth in emerging market and developing economies, accounting for more than one-third of their GDP growth rate during the projection horizon", the report also read.

In its third downgrade since October, the global lender said some major economies, including China and Germany, might need to take short-term actions to prop up growth.

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"The projected recovery reflects modestly reduced but continued policy uncertainty in the South African economy after the May 2019 elections", the International Monetary Fund said in its World Economic Outlook before its spring meetings in Washington this month. The Dow Jones Industrial Average index fell 0.7 per cent and the S&P 500 and the Nasdaq Composite both closed about 0.6 per cent lower as the growth forecasts and renewed trade worries sparked by new USA tariff threats on European aircraft and food products weighed on sentiment.

The outlook for Germany, one of the main drivers of European growth, suffered from weaker demand for its exports, softer consumer spending and new emissions standards that have depressed vehicle sales.

Elsewhere, natural disasters hurt activity in Japan.

Raises 2019 China growth forecast to 6.3% from 6.2%.

A no-deal Brexit could see both Britain and the European Union slide into a two-year recession in a worst-case scenario, the International Monetary Fund (IMF) has said.

US tariffs on Chinese imports are hitting Chinese growth and also weighing on Latin America and other parts of the world dependent on Chinese demand for commodities. But the fund's latest 2019 outlook was a slight upgrade from the 6.2 per cent growth it had forecast for China in January.

Canada is barely addressed in the text of the report, although it did note that the country would be one of the biggest beneficiaries if the US continues to apply tariffs to products from China. On the other hand, economic growth in China, despite fiscal stimulus and no further increase in tariffs from the United States relative to those in force as of September 2018, is projected to slow on an annualised basis in 2019 and 2020.

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