Economy

Global growth to stay weak: IMF

The International Monetary Fund maintained its forecast for weak global growth and warned that further stagnation will fuel more populist sentiment against trade and immigration that would stifle activity, productivity and innovation.

In the latest update of its World Economic Outlook, the IMF said that a drop in U.S. growth for 2016 due to a weak first-half performance would be offset by strengthening in Japan, Germany, Russia, India and some other emerging markets.

The Fund kept its overall global growth forecasts unchanged at 3.1 per cent for 2016 and 3.4 per cent for 2017 after cutting its outlook for five straight quarters.

“Taken as a whole, the world economy has moved sideways,” IMF chief economist Maurice Obstfeld said in a statement.

“Without determined policy action to support economic activity over the short and longer terms, sub-par growth at recent levels risks perpetuating itself.”

The new forecasts were released as global policymakers begin gathering in Washington for the IMF and World Bank annual meetings this week. The IMF said advanced economies as a whole will see a weakening of growth in 2016, down 0.2 percentage point from July to 1.6 per cent, while emerging market and developing economies will see a 0.1 percentage point gain in growth to 4.2 per cent.

The IMF said advanced economies were forecast to grow 1.8 per cent and emerging markets at 4.6 per cent.

The U.S. accounts for much of the decline in advanced economies, with a reduction to 1.6 percent growth from 2.2 per cent forecast in July, due to a disappointing first-half performance caused by weak business investment and a draw-down of goods inventories.

Growth forecasts for China remained unchanged at 6.6 per cent for 2016 and 6.2 percent for 2017.

India's growth will improve slightly to 7.6 per cent in both years.

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