THE INTERNATIONAL MONETARY FUND CUTS GLOBAL ECONOMIC OUTLOOK
Bloomberg — The International Monetary Fund cut its
outlook for global growth to the lowest since the financial
crisis amid a bleaker outlook in most major advanced economies
and signs that higher tariffs are weighing on trade.
The world economy will grow 3.3 percent this year, down
from the 3.5 percent the IMF had forecast for 2019 in January,
the fund said Tuesday in its latest World Economic Outlook. The
2019 growth rate would be the weakest since 2009, when the world
economy shrank. It’s the third time the IMF has downgraded its
outlook in six months.
The global volume of trade in goods and services will
increase 3.4 percent this year, weaker than the 3.8 percent gain
in 2018 but reduced from the IMF’s January estimate of 4
percent, the fund’s report showed.
Global economic growth will recover in the second half of
this year, before plateauing at 3.6 percent from next year,
according to the Washington-based fund. A series of encouraging
developments have boosted optimism about the world economy in
recent weeks, including the decision of the Federal Reserve to
put interest-rate hikes on hold and encouraging data from
China’s manufacturing sector and the U.S. job market.
Still, the IMF is warning that risks are skewed to the
downside, with a range of threats menacing the global economy,
including the possible collapse of negotiations between the U.S.
and China to end their trade war, and the departure of Britain
from the European Union without a transition agreement, known as
the “no-deal” Brexit scenario.
Renaissance or Reprieve? The Global Economy Sends Mixed
“Amid waning global growth momentum and limited policy
space to combat downturns, avoiding policy missteps that could
harm economic activity needs to be the main priority,” the IMF
IMF Managing Director Christine Lagarde is warning that the
world economy faces a “delicate moment” as finance ministers and
central bankers prepare to gather in the U.S. capital this week
for the spring meetings of the IMF and World Bank.
While intense trade talks between the U.S. and China have
raised expectations of a lasting truce between the world’s two-
largest economies, analysts remain worried about the strength of
the global economy, a decade after the financial crisis. Lagarde
said last week the fund doesn’t anticipate a recession in the
The fund cut its forecast for U.S. growth to 2.3 percent
this year, down 0.2 percentage point since the IMF’s last global
outlook in January. The downgrade reflects the impact of the
partial government shutdown that ended in January, as well as
lower-than-expected public spending. The fund upgraded its U.S.
forecast next year to 1.9 percent, up 0.1 percentage point, on
the Fed’s shift to a more patient stance on interest rates.
The IMF slashed its outlook for the euro area to 1.3
percent this year, down 0.3 point from three months ago. Growth
is expected to be softer in several major European economies,
including Germany, where weak global demand and tougher car-
emission standards have hit factory production. Weak domestic
demand and high sovereign-debt spreads have dimmed Italy’s
outlook, while street protests in France weighed on growth, the
The IMF cut its outlook for U.K. growth to 1.2 percent this
year, down 0.3 point from three months ago.
The IMF raised its forecast for Chinese growth by 0.1 point
to 6.3 percent this year, while lowering its projection for
growth in Japan by 0.1 point to 1 percent. The fund cut its
outlook for India’s growth this year to 7.3 percent, down from
7.5 percent in January.
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