IMF forecasts dip in global growth in 2019
- The International Monetary Fund (IMF) has projected that global growth will be 3.3% in 2019, down from 3.6% in 2018 and 4% in 2017.
- This lower projection is due to a slower global expansion in the second half of 2018 caused by U.S.-China trade tensions, macroeconomic stress in Turkey and Argentina, tighter credit policies in China and financial tightening, apart from a normalisation of monetary policy in advanced economies.
- India’s growth is projected to pick up, from 7.1% in 2018, to 7.3% in 2019 and 7.5% in 2020, “supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy,”
- Beyond 2020, global growth is expected to level out at 3.6% over the medium term, driven by a moderation in expansion in advanced countries (caused by a weak productivity growth and a slow labour force growth) and the stabilisation of emerging market expansion at 2020 levels.
- Advanced economies are expected to slow down to 1.6% growth by 2022 and remain at that rate thereafter.
- For emerging markets and developing countries, growth is expected to steady at 4.8% over the medium term and given that these groups are growing faster than advanced economies, their contribution to global growth is expected to increase from 76% to 85% over the next five years. However, there are “important differences” within emerging markets and developing economies.
- For instance, China is expected to slow down to 5.5% by 2024 as it moves towards increasing private consumption and services and regulatory tightening.
- India’s growth is expected to stabilise at 7.75% over the medium term, driven by structural reforms and the easing of infrastructure bottlenecks.
- In terms of policy priorities, the IMF has called for a “continued implementation of structural and financial sector reforms” in order to lower public debt and aid growth.