The IMF made the steepest cut to its global-growth outlook in three years, with diminished expectations almost everywhere except the US more than offsetting the boost to expansion from lower oil prices.
The world economy would grow 3.5 percent this year, down from the 3.8 percent pace projected in October, the IMF said in its quarterly global outlook released late on Monday.
The Washington-based lender also cut its estimate for growth next year to 3.7 percent, compared with 4 percent in October.
Photo: EPA
The weakness, along with prolonged below-target inflation, is challenging policymakers across Europe and Asia to come up with fresh ways to stimulate demand more than six years after the global financial crisis.
Central bankers and government officials, including Bank of England Governor Mark Carney and Bank of Japan Governor Haruhiko Kuroda might talk about options when they convene this week at the World Economic Forum’s annual meeting in Davos, Switzerland.
“The world economy is facing strong and complex cross currents,” IMF chief economist Olivier Blanchard said in the text of remarks at a press briefing yesterday in Beijing. “On the one hand, major economies are benefiting from the decline in the price of oil. On the other, in many parts of the world, lower long-run prospects adversely affect demand, resulting in a strong undertow.”
The IMF cut its outlook for consumer-price gains in advanced economies almost in half to 1 percent for this year. Developing economies would see inflation this year of 5.7 percent, a 0.1 percentage point markup from October’s projections, the fund said.
The growth forecast reduction was the biggest since January 2012, when the fund lowered its estimate for expansion that year to 3.3 percent from 4 percent amid forecasts of a recession in Europe.
The IMF marked down estimates for this year for places including the eurozone, Japan, China and Latin America. The deepest reductions were in places suffering from crises, such as Russia, or for oil exporters, including Saudi Arabia.
IMF Managing Director Christine Lagarde outlined the sobering outlook in her first speech of the year last week, saying that oil prices and US growth “are not a cure for deep-seated weaknesses elsewhere.”
The US is the exception. The IMF upgraded its forecast for the world’s largest economy to 3.6 percent growth for this year, up from 3.1 percent in October.
Cheap oil, more moderate fiscal tightening and still-loose monetary policy would offset the effects of a gradual increase in interest rates and the curb on exports from a stronger dollar, the fund said.
In Europe, weaker investment would overshadow the benefits of low oil prices, a cheaper currency and the European Central Bank’s anticipated move to expand monetary stimulus by buying sovereign bonds, the IMF said.
The fund lowered its forecast for the 19-nation eurozone to 1.2 percent this year, down from 1.3 percent in October.
The ECB should go “all in” in its bond-buying program, Blanchard said in an interview with Bloomberg TV.
“We want to make sure that when there’s an announcement, that it’s as large as what the market’s expecting,” he said.
The IMF also trimmed its estimate for China’s growth to 6.8 percent, down 0.3 percentage point from October.
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the University of Tokyo (UTokyo) yesterday announced the launch of the TSMC-UTokyo Lab to promote advanced semiconductor research, education and talent development. The lab is TSMC’s first laboratory collaboration with a university outside Taiwan, the company said in a statement. The lab would leverage “the extensive knowledge, experience, and creativity” of both institutions, the company said. It is located in the Asano Section of UTokyo’s Hongo, Tokyo, campus and would be managed by UTokyo faculty, guided by directors from UTokyo and TSMC, the company said. TSMC began working with UTokyo in 2019, resulting in 21 research projects,
Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty Co (住商不動產) said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC, 聯徵中心). “The simultaneous decline across all six cities reflects just how drastically the market
Ashton Hall’s morning routine involves dunking his head in iced Saratoga Spring Water. For the company that sells the bottled water — Hall’s brand of choice for drinking, brushing his teeth and submerging himself — that is fantastic news. “We’re so thankful to this incredible fitness influencer called Ashton Hall,” Saratoga owner Primo Brands Corp’s CEO Robbert Rietbroek said on an earnings call after Hall’s morning routine video went viral. “He really helped put our brand on the map.” Primo Brands, which was not affiliated with Hall when he made his video, is among the increasing number of companies benefiting from influencer
RSS