The IMF said on Tuesday that it sees slower global growth this year and next year than it did just three months ago, citing expectations of a slowdown in developing countries such as China and Brazil and a more protracted recession in Europe.
The international lending agency released an update of its World Economic Outlook issued in April, projecting the world economy will grow at 3.1 percent this year, down from 3.3 percent forecast three months ago.
Next year’s projection was cut to 3.8 percent from 4 percent.
“The world economy remains in a three-speed mode,” IMF chief economist Olivier Blanchard said.
“Emerging markets are still growing rapidly. The US recovery is steady, but much of Europe continues to struggle,” he told a news conference in Washington.
Blanchard said growth almost everywhere is a bit weaker than forecast in April, but downward revisions are particularly noticeable in developing countries.
The IMF said the possibility of a more drawn-out slowdown in developing countries is a new risk that has emerged since April.
Blanchard noted a clear downward trend in China, Russia, Brazil and India, and attributed it to slowdowns in domestic demand and consumption, but also to weaker exports because of sluggishness in advanced economies.
China’s forecast for this year was scaled back to 7.8 percent compared to 8.1 percent made in April. For next year, it fell to 7.7 percent from 8.3 percent.
“My impression is the country where there is the largest risk in terms of large decrease in growth is China,” Blanchard said.
The world’s second-largest economy has become unbalanced with too much investment and too little consumption, the IMF said.
That investment, largely financed through China’s shadow banking system, has grown rapidly during the global financial crisis of the past few years.
In addition to slowing growth, China is seeing a credit squeeze as it tries to tackle the hazards of looming debts that are not reported on bank balance sheets, but lurk throughout the country’s murky, still developing financial system.
That off-balance-sheet lending, or shadow financing, could threaten financial stability if not reined in.
Another potential drag on global growth is the possibility that the US will start tapering its extraordinary stimulus program of bond buying.
The US Federal Reserve has injected more than US$2 trillion into financial markets since late 2008 and kept borrowing costs down.
With markets already anticipating the tapering, the IMF said some developing countries are already feeling its effects in the form of falling share prices and depreciating currencies.
A recession in the eurozone is shaping up to be deeper than expected, another factor pulling down the forecast, the IMF said.
The eurozone is now expected to contract by 0.6 percent this year, compared to April’s forecast for a 0.4 percent decline.
The US economy also looks weaker than previously expected, the IMF said, citing tight fiscal and financial conditions. The Fund lowered forecasts for US growth to 1.7 percent this year, down from 1.9 in April, and to 2.7 percent for next year, down from 2.9 percent.
Japan bucked the global trend. The IMF revised its growth forecast for this year up to 2 percent from April’s 1.5 percent.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last