Global economic watchdog IMF has disclosed pessimistic projections for the global economy for 2016 and has warned that the progress has been “too slow for too long.” IMF’s rather bleak projections were based on sluggish growth patterns observed in a climate of increased economic uncertainty.
Economic growth projections for this year are a “modest” 3.2 percent, indicative of a downward revision of 0.2 percent compared to January’s forecast. These IMF projections allude to a weak 2016 marked by increase debt, limited job prospects, and a large number of financial as well as non-financial inhibitors.
According to Maurice Obstfeld, IMF Economic Counselor and Director of Research, the global economy may be exposed to complex economic as well as non-economic challenges.
“Lower growth means less room for error. Persistent slow growth has scarring effects that themselves reduce potential output and with it, demand and investment. If national policymakers were to clearly recognize the risks they jointly face and act together to prepare for them, the positive effects on global confidence could be substantial”
However, despite the negative global economic outlook for this year, IMF economists are confident that the progress of emerging markets and advancing economies will be allowed for a more optimistic outlook for 2017 and offer improved prospects for economic recovery.
Fast-growing economies such as China and India are being seen as the key harbingers of change, says IMF. In addition, countries like Vietnam and the Philippines may also be drawn into the limelight as powerful emerging economies with massive potential for investments particularly in light of the current global economic slowdown. India is home to roughly 1.3 billion people, the Philippines and Vietnam around 100 million each, all three poised for further growth for decades to come.
India for example has continued to prosper as a leading economic powerhouse when other major economies have struggled to cope with the economic downturn. Soon to become the fastest growing major economy in 2016-17 with a projected growth rate of 7.5 percent, India is expected to surge past the rest owing to its private consumption, which has improved tremendously as a result of a highly lucrative investment climate, lower energy prices, and higher incomes. IMF projections for China are also reasonably optimistic, suggesting that the Asian economic powerhouse is likely to grow at 6.5 percent in 2016, 0.2 percent up from January’s projections.
Elsewhere, IMF’s outlook for major western economies namely the United States, the United Kingdom, Canada, and the European Union, as well as Japan in the east, is not particularly promising. According to recent statistics, the United States is likely to grow by 2.4 percent this year, sliding from a 2.6 percent projection back in January. Japan has similarly experienced a striking dip in private consumption with a projected growth rate of 0.5 percent for 2016.
IMF experts have also observed an unsettling pattern of recessions in major economies namely Brazil and Russia as well as shrinking growth rates in some Central American and Middle Eastern countries. Receding growth prospects in some African and other weaker economies around the world owing to instability and other geopolitical indicators were also noted.
IMF experts have delineated a three-pronged strategy for countries to collectively adopt in their respective attempts to stem the tide of faltering economic growth. It includes aptly prioritized short- to long-term structural reforms, robust fiscal measures such as implementing active labor market policies, and boosting competition and investment. Last but not least, it advocates serious monetary policy measures intended to facilitate overall economic resurgence.
The International Monetary Fund ‘s World Economic Outlook – WEO report is a survey presented by IMF economists mostly twice every year. It offers new insights based on a meticulous assessment of global economic trends and makes convincing projections for the future of the world’s economy.
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