Citing the persistent weakness in the eurozone and a widespread slowdown in several major emerging markets, the International Monetary Fund (IMF) has downgraded its forecast for global economic growth in 2015. According to the new forecast, the global economy will only grow 3.8 per cent next year, down from the previous forecast of 4% issued in July by the institution, the Wall Street Journal writes.
The IMF has marked down the growth prospects of the three strongest economies in the eurozone, Germany, France and Italy. The latter heads into its third consecutive year of recession, the IMF says. According to the institution, the probability of the eurozone re-entering a recession period in the next six months has doubled since the last outlook in April, to 38 per cent.
Outside Europe the IMF has observed various signals. The output in Japan is “disappointing”, and growth of several other markets, like Russia and Brazil, will also slow down. In the US, in turn, the fund has observed strong signs of recovery. Besides, the slowdown in the emerging economies is partly compensated by growth observed in countries like Spain, Canada and Mexico.
Christine Lagarde, Managing Director of the International Monetary Fund, has predicted the global economy to be stuck on a much lower growth for years to come. According to her words, the recovery of the economy is “brittle, uneven, and beset by risks”. Her pessimistic (or realistic?) outlook has set the stage for a series of meetings between central bank governors and finance ministers from several countries this week, where officials will urge each other to scale up their economies.
[ads2]
The IMF has urged the European Union to do its best to avoid falling back into a recession. It specifically urged the European Central Bank to buy member state assets if there will be no improvement in the inflation outlook, and Germany, Europe’s economic powerhouse, to stimulate growth through new infrastructure projects.