IMF Revises Global Economic Growth Forecast

The International Monetary Fund (IMF) in its latest report published on its official website has predicted that global economic growth this year will be lower than last year. This report, released on Tuesday, October 7, states that global economic growth will be 3.1 percent this year, down from 3.4 percent last year. The IMF indicates that economic growth will improve slightly next year, reaching 3.6 percent globally. The new forecast is 0.2 percent lower than the figure reported in July. According to the report, emerging economies along with developed countries have been the driving force of global economic growth in recent years, but the slowdown in growth in emerging markets like China, falling oil prices, and the prices of export commodities, as well as the ongoing recession in major Western economies, have contributed to the slowdown in global economic growth. Maurice Obstfeld, the IMF's economic advisor and head of the research department, stated, 'Six years after the global economic crisis, the deepest and most widespread crisis since World War II, the return of the global economy to a path of development and balance remains elusive.' He noted that forecasts indicate the interplay of three strong determining waves in the global economy: 'The first factor is the transformation in the Chinese economy from an export-driven, investment-dependent, and production-focused model to one that emphasizes domestic consumption and services. The second factor is the decline in commodity prices, and finally, the third factor is the imminent increase in interest rates in the United States, which could have global repercussions and exacerbate existing uncertainties.' The report states that growth in advanced economies will improve slightly, reaching 2 percent this year and 2.2 percent next year, mainly influenced by increased economic stabilization in the Eurozone and growth in Japan, which has benefited from low oil prices, accommodative monetary policies, and improved financial conditions. However, according to this international financial institution's assessment, the situation in emerging and developing economies is weak. 'Economic growth in these countries is expected to decline from 4.6 percent last year to 4 percent this year.' The report adds that GDP growth in oil-exporting countries, the slowdown in China's growth, and the weak outlook for other commodity exporters like Latin American countries due to falling prices of their produced goods have contributed to the slowdown in global economic growth, and political tensions and internal conflicts in some countries remain high. According to the report, external conditions for emerging economies are becoming significantly tougher. The prospect of rising interest rates in the U.S. and the strengthening dollar has increased financial costs for some borrowers in developing and emerging economies. Nevertheless, the IMF states that evidence suggests a better outlook for next year, with a reduction in the severity of the recession, and better growth is anticipated in some countries like Russia, Brazil, the Middle East, and Latin America. Russia's economic growth is projected to be negative 3.8 percent this year and negative 0.6 percent next year. Brazil is also expected to see a negative growth of 3 percent this year and negative 0.1 percent next year. China's economic growth is expected to decline from 7.3 percent last year to 6.8 percent this year and 6.3 percent next year. India's economic growth will remain at 7.3 percent this year, but is projected to rise to 7.5 percent in 2016. U.S. economic growth is expected to increase from 2.4 percent last year to 2.6 percent this year and 2.8 percent next year. The growth rate in Middle Eastern countries is also expected to decrease by 0.2 percent this year, but is projected to increase by 1.4 percent to 3.9 percent next year. This international institution also predicted on Monday that Iran's economic growth would decline from 3 percent last year to between 0.5 percent and negative 0.5 percent this year, largely depending on the timing of the lifting of sanctions against Iran.