IMF cuts global growth forecast as China, falling oil prices weigh
Jan 21, 2016 The International Monetary Fund recently cut its global growth forecasts for the third time in less than a year, citing a sharp slowdown in China trade and weak commodity prices.
The Fund forecast that the world economy will grow at 3.4 percent in 2016 and 3.6 percent in 2017. Both years feature a 0.2 percentage drop from the previous estimates made last October.
The forecast update came as global financial markets have been plummeted by China’s economic slowdown and dropping oil prices.
Commenting on this, Maurice Obstfeld, IMF Economic counsellor said:
“China could encounter rough patches where growth slows more than expected directly affecting trade partners while disturbing foreign exchange and other asset markets world wide”
The IMF however maintained its previous China growth forecasts of 6.3 percent in 2016 and 6.0 percent in 2017, both of which represent a sharp slowdowns from 6.9 percent in 2015 and 7.3 percent in 2014.
Obstfeld went on to say:
“These oil price movements certainly impose stresses on oil exporters especially in countries where the government and budget depends on oil revenues but there is a silver lining in terms of affects on consumers worldwide, so they are not an unmitigated negative,”