Fund-Bank Spring Meet Downs Growth Forecast

In its latest World Economic Outlook (WEO), the Washington-based institution revised downward its earlier projections for growth this year and next. According to the 12 April report, global growth should hit 3.2 percent this year and 3.5 percent in 2017 – down from the earlier projections of 3.4 and 3.6 percent released in January.

The sobering update comes as finance and development officials from nearly 200 countries are gathering in Washington for the Spring Meetings of the International Monetary Fund and World Bank Group, set for 12-17 April.

With these prospects in mind, the IMF has recommended that countries undertake a ‘three-pronged approach” that incorporates a mix of structural reforms, fiscal support and stimulus, and monetary policy measures.

Furthermore, the report says, “policymakers also need to make contingency plans and design collective measures for a possible future in case downside risks materialise.”

The WEO noted various reasons for the new figures, including the oil price slump and slowing growth in countries that are its key exporters; China’s slowdown; Brazilian and Russian recessions; and lower growth prospects for many African countries.

One bright spot, the IMF report noted, could be a potential increase in demand from countries that are major buyers of oil.

The Fund, along with warning overall regarding the long-term ramifications of continued low oil prices, also noted that there are other significant risks for the overall global economy.

These include, for example, terrorism, refugee flows, and global health crises such as the 2015 Ebola outbreak that cost thousands of lives and had severe economic implications.

Separately, the WTO released last week its own update to its projections for this year’s trade growth, finding that this number – 2.8 percent – is set to match the “sluggish” growth seen last year. In 2017, trade growth should reach 3.6 percent.

“This will be the fifth consecutive year of trade growth below three percent,” said WTO Director-General Roberto Azevêdo. “Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices.”

The global trade chief further warned about the risks that falling trade value – and volume – could have for the growth prospects of vulnerable developing countries, along with repeating previous concerns over the growing stock of trade protectionist measures.