IMF chief economist Maurice Obstfeld said a return to robust and synchronized global expansion remains elusive. Photo: Internet
EJ InsightToday, 08:14
The International Monetary Fund warned of a rising risk of a global recession as it again downgraded its growth outlook for the world economy, the Wall Street Journal reported.
Global real GDP is forecast to grow by only 3.1 percent this year, down from its previous forecast of 3.3 percent, the IMF said in its latest World Economic Outlook.
The IMF reduced its prediction for global growth in 2016 by the same amount to 3.6 percent. The world economy grew 3.4 percent last year.
China’s slowdown and the subsequent plunge in commodity prices revealed a developing world that overinvested, borrowed excessively and exhausted its ability to expand without major economic overhauls, the newspaper quoted the IMF report as saying.
The IMF also cut its forecast for emerging markets to 4 percent this year, down 0.2 percentage point from its last update in July.
That marks the fifth consecutive year of declining growth and a level nearly half the rate the IMF recorded six years ago, the Journal said.
Modest growth in the US and a meager recovery in the eurozone haven’t been able to offset falling output in emerging markets, according to the IMF.
“Six years after the world economy emerged from its broadest and deepest postwar recession, a return to robust and synchronized global expansion remains elusive,” Maurice Obstfeld, the IMF’s new chief economist, said in the report.
Besides a broad-based downgrade in growth around the world, “downside risks to the world economy appear more pronounced than they did just a few months ago”, he added.
The fund said there’s a 50 percent chance the global growth rate will fall below 3 percent next year, a level it considers as “equivalent to a global recession”.
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