While it should not be a surprise to anyone who frequents this site that economies around the world are slowing. The IMF appears to hold this thought as well with its recent report. Pretty much across the board the IMF cut growth forecasts. The chart below lays it out pretty well. Most of these cuts revolve around the continued drops in commodities. If we want to take any positives away from the report – at least India and Mexico keep on moving forward.
Click here to visit the original posting page over at Bloomberg.
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The International Monetary Fund has grown more pessimistic over the last three months over global growth, as declining commodity prices and increasing financial market volatility take their toll, particularly on emerging markets.
The IMF’s new forecast for global growth this year and next was shaved by 0.2 percentage points each year, compared to the organization’s views from July. The pessimism was stark for Brazil and Canada in particular, with Brazilian projected output shaved by 1.5 percentage points this year and 1.7 percentage points next year, and with Canadian GDP trimmed by a half point lower this year and by 0.4 percentage points next year.
Weak oil prices have hurt both countries, with Brazil also being hurt by its exposure to China and a corruption scandal at state-run Petrobras.
| Geography | 2014 | 2015 forecast | 2016 forecast |
| World output | 3.4% | 3.1% | 3.6% |
| United States | 2.4% | 2.6% | 2.8% |
| Germany | 1.6% | 1.5% | 1.6% |
| France | 0.2% | 1.2% | 1.5% |
| Italy | -0.4% | 0.8% | 1.3% |
| Spain | 1.4% | 3.1% | 2.5% |
| Japan | -0.1% | 0.6% | 1% |
| United Kingdom | 3% | 2.5% | 2.2% |
| Canada | 2.4% | 1% | 1.7% |
| Russia | 0.6% | -3.8% | -0.6% |
| China | 7.3% | 6.8% | 6.3% |
| India | 7.3% | 7.3% | 7.5% |
| Brazil | 0.1% | -3% | -1% |
| Mexico | 2.1% | 2.3% | 2.8% |
Emerging economies such as China and Brazil are headed for their fifth straight year of declining growth, the IMF said.
The U.S. forecast from the IMF, of 2.6% growth this year and 2.8% next year, is a tenth of a percent higher for this year and two-tenths lower for 2016. The IMF forecast is a bit more optimistic than the Federal Reserve’s projection of 2.1% growth in 2015 and 2.3% growth in 2016.
Globally, the IMF says persistently low investment helps explain limited labor productivity and wage gains.
“Slow expected potential growth itself dampens aggregate demand, further limiting investment, in a vicious circle. Aging populations further restrain investment in a number of countries; in some others, institutional shortcomings or political instability are deterrents,” the report says.