China’s slowdown and tumbling commodity prices will push global economic growth this year to the lowest level since the recession year 2009, the IMF predicted on Tuesday.
The fund says the world economy will grow 3.1 percent this year, down from a July forecast of 3.3 percent and from 3.4 percent growth last year.
“The risks seem more tilted to the downside than they did just a few months ago,” IMF chief economist Maurice Obstfeld told reporters.
RISK DOWNPLAYED
Still, Obstfeld downplayed the risk of a global recession.
The US Federal Reserve last month cited economic weakness around the world — and especially in China — when it decided to postpone a long-anticipated increase in short-term US interest rates, which it has kept near zero since December 2008.
Obstfeld said any rate increase in the US would be good news, reflecting the Fed’s vote of confidence in the US economy, the world’s largest.
The fund predicts the US will grow 2.6 percent this year, up from a July forecast of 2.5 percent and from 2.4 percent growth last year.
ANOTHER DROP
Emerging market economies will likely grow 4 percent, which would mark the fifth straight annual drop.
Among those hardest hit by the commodities bust: The Brazilian economy, forecast to contract by 3 percent this year; and Russia, forecast to shrink 3.8 percent because of lower oil prices and economic sanctions imposed by the West as punishment for Russian aggression in Ukraine.
Collapsing energy prices are also hurting Canada. The IMF downgraded its forecast for the Canadian economy by half a percentage point to 1 percent this year.
The IMF expects Chinese economic growth to drop to a 25-year low 6.8 percent this year, but that is unchanged from its July forecast.
Chinese manufacturers are struggling, but “services seem to be booming,” Obstfeld said.
IMPROVEMENT
The IMF foresees continued improvement in Europe. It kept its forecast for 1.5 percent growth this year in the 19 countries that share the euro currency.
The Japanese economy is expected to grow 0.6 percent this year, down from the IMF’s July forecast of 0.8 percent, but an improvement from last year when it shrank 0.1 percent.
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