IMF predicts lower global growth of 3.1% in 2015

Global real GDP grew at 3.4% last year

The IMF today forecast a lower global growth of 3.1 per cent this year citing modest pickup in advanced economies and a slowdown in emerging markets, primarily reflecting weakness in some large developing nations and oil-exporting countries.

In its latest World Economic Outlook (WEO), the IMF forecast global growth of 3.1 per cent this year and 3.6 per cent in 2016. Global real GDP grew at 3.4 per cent last year.

"Six years after the world economy emerged from its broadest and deepest postwar recession, the holy grail of robust and synchronised global expansion remains elusive," said Maurice Obstfeld, IMF Economic Counsellor and Director of the Research Department.

"Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago," he said.

Obstfeld said these forecasts reflect a world economy that is at the intersection of at least three powerful forces.

First, China's economic transformation away from export- and investment-led growth and manufacturing, in favour of a greater focus on consumption and services; second, and related, the fall in commodity prices; and third, the impending increase in US interest rates, which can have global repercussions and add to current uncertainties.

In this global environment, with the risk of low growth for a long time, the WEO underlines the need for policymakers to raise actual and potential growth.

Growth in advanced economies is projected to increase modestly this year and next.

This year's pickup reflects primarily a strengthening of the modest recovery in the eurozone and a return to positive growth in Japan, supported by declining oil prices, accommodative monetary policy, and improved financial conditions, and in some cases, currency depreciation, it said.

While growth prospects in emerging markets and developing economies vary across countries and regions, the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6 per cent in 2014 to 4 per cent in 2015.

The fifth straight year of slowing growth reflects a combination of factors - weaker growth in oil exporters, a slowdown in China with less reliance on commodity-intensive investment, adjustment in the aftermath of credit and investment booms, and a weaker outlook for exporters of other commodities, including in Latin America, following declines in their export prices, it said.