The International Monetary Fund (IMF) has slashed its forecasts for growth of the global economy, calling it sluggish, and said there isn’t any sign on the horizon that things are going to turn around, according to a report by CNBC.
In October, the IMF, which is based in Washington, predicted that the global growth rate of the economy would be 3 percent last year and 3.4 percent this year.
That’s no longer the case. It is now revising those numbers to 2.9 percent for 2019 and 3.3 percent for 2020. Most of the drop was due to India’s slowed growth, the IMF said.
The organization has set the 2021 growth rate prediction at 3.4 percent.
“The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels,” said Gita Gopinath, the IMF’s chief economist.
She added that although the growth rates were cut, some of the largest threats and uncertainties were mitigated.
“Some risks have partially receded with the announcement of a U.S.-China Phase I trade deal and lower likelihood of a no-deal Brexit,” she said.
The U.S.-China trade war has softened with the agreement to a “phase one” trade deal. While some tariffs remain in place, the market views it as a step forward.
The Brexit issue has also cooled, as U.K. lawmakers have said yes to an agreement to outline the exit from the European Union, which is scheduled for Jan. 31. The deal means there won’t be a sudden breakup and it gives businesses, as well as citizens, a clearer understanding of what’s going to happen.
However, there are still issues, Gopinath said.
“While there are signs of stabilization, the global outlook remains sluggish and there are no clear signs of a turning point. There is simply no room for complacency, and the world needs stronger multilateral cooperation and national-level policies to support a sustained recovery that benefits all,” she said.