The
International
Monetary Fund lowered its outlook for global growth this year as
expansions weaken from China
to the U.S. and military conflicts raise the risk of a surge in oil prices.
The
world economy will advance 3.4 percent in 2014, the
IMF said, less than its 3.6 percent prediction in
April and stronger than last year’s 3.2 percent. Next
year growth will be 4 percent, compared with an April
forecast for 3.9 percent, the fund said.
“Global
growth could be weaker for longer, given the lack of robust momentum in
advanced economies” even as interest rates stay low,
the IMF said in an update to its World Economic Outlook report. “Monetary policy should
thus remain accommodative in all major advanced economies.”
The
IMF report reflected a world rattled by geopolitical risks that have risen
since April, including the potential for “sharply higher oil prices” because of
recent Middle East unrest.
Growth
in emerging
markets is projected to be 4.6 percent
this year, compared with an April forecast for 4.9 percent,
the IMF said.
China’s
economy
is seen growing 7.4 percent this year, less than the
7.5 percent forecast in April, the IMF said. Next
year, growth in the world’s second-largest economy with slow
further, to 7.1 percent, the Washington-based fund
said, less than its forecast in April for 7.3 percent
growth.
Among
developing economies, the biggest reduction in forecasts was for Russia’s growth, which was
downgraded to 0.2 percent from 1.3 estimated
previously amid capital flight caused by its involvement in the conflict in
Ukraine.
The
IMF’s Russia forecasts exclude the effects of recent sanctions the U.S. has
imposed on the country and don’t take into account any that the European Union
might take, IMF chief economist Olivier Blanchard said at
a press conference in Mexico City. “These sanctions could probably further
decrease the growth rate of Russia,” he said.
In
Japan, the economy’s
projected 1.6 percent advance this year may be
followed by 1.1 percent from in 2015, “mostly due to
the planned unwinding of fiscal stimulus,” the IMF said.
In
the 18-country euro region, Italy and France were cut while Spain was revised higher
to 1.2 percent, up from 0.9 percent.
Most
of the downgrade for this year in developed economies was due to the U.S.,
which was cut to 1.7 percent from an April prediction
of 2.8 percent because of a first-quarter
contraction. The forecast for 2015 was unchanged at 3 percent.
The IMF issued its U.S. forecasts on 23 July.
In
prepared remarks, Blanchard said the U.S. economy is forecast
to grow 3 percent to 3.25 percent
for the rest of the year. He indicated the fund agrees with Federal Reserve plans to
wind down stimulus.