IMF Cuts Growth Outlook

The International Monetary Fund cut its global economic growth forecasts for the third time this year on Tuesday, warning of weaker growth in core euro zone countries, Japan and big emerging markets like Brazil.  In its flagship World Economic Outlook report, the Washington-based lender cut its global growth expectations to 3.3 percent for this year and 3.8 percent for next year. In July it had expected growth of 3.4 percent in 2014 and 4 percent in 2015.

The IMF has now cut its current-year growth forecasts nine out of 12 times in the last three years as it consistently overestimated how quickly richer countries would be able to pull free from high debt and unemployment in the wake of the 2007-2009 global financial crisis.  It also lowered its expectations for longer-term potential growth, something its chief economist Olivier Blanchard called “the force from the future.”

“You have these forces from the past, the forces from the anticipated future … and I think that explains the sequence of revisions that we’ve had,” Blanchard said in an interview.  The IMF again urged countries to carry out an array of structural reforms, such as improving labor market policies, fighting tax evasion and raising infrastructure spending, to avoid the risk of economic stagnation.

Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.