Growth across 70% of the world economy is slowing amid a perfect storm of stagnating manufacturing, slumping trade growth and political turmoil, the IMF has warned.
The International Monetary Fund, which monitors emerging risks and lends to countries in distress, cut its growth forecast for 2019 to 3.3%, which would make this year the weakest since the financial crisis.
IMF chief economist Gita Gopinath said the global economy is in a “delicate moment”, while the organisation's Managing Director Christine Lagarde put it in plainer terms:
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“Only two years ago, 75% of the global economy experienced an upswing. For this year, we expect 70% of the global economy to experience a slowdown in growth” she told the US Chamber of Commerce.
The downward revision “came in part from a sharp drop in global trade volumes in recent months,” CNN Business says, “following an artificial run-up in imports and exports in 2018 in advance of tariffs imposed by the United States”.
“But a pickup is on the horizon” says the news network, with growth expected to recover next year unless “policy missteps” get in the way.
According to Bloomberg’s Andrew Mayeda, “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 US 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 US and China to end their trade war” he writes.
Reuters reports that another “potential misstep lies in Britain’s indecision over how to leave the EU”.
“Despite looming deadlines, London has not decided how it will try to shield its economy during the exit process” it says. “The IMF’s new forecast assumes an orderly ‘Brexit,’ but the Fund said a chaotic process could shave more than 0.2% from global growth in 2019”.
Any recovery is “precarious”, The Daily Telegraph says, and based on hopes countries such as Argentina and Turkey can escape their recessions.
“By contrast the rich world will continue to slow next year in any case” says the paper.
Eurozone growth is set to fall from 1.8% last year to 1.3% in 2019 before rising to 1.5% in 2020, with Spain the strongest performer of the euro’s big four economies.
“Weakening demand, production problems from new German rules on car emissions, fears over Italian debt and street protests in France have all drained momentum from the economy,” the Telegraph says.
