International Monetary Fund Predicts Disappointing Global Economic Growth in 2016
The International Monetary Fund (IMF) announced on Wednesday that the global economic growth outlook for 2016 will be disappointing. The outlook for medium-term has also deteriorated, according to the IMF.
Christine Lagarde, IMF managing director, stated that China’s slowing economy and the U.S.’s decision to raise interest rates are contributing to uncertainty in the world’s global markets. The director also stated that higher risks of vulnerability worldwide will result in disappointing growth this coming year.
Global trade has also slowed in many countries, and raw materials have had their prices decline in recent months. Emerging markets are facing higher financial risks, and many countries are facing weakened financial sectors. Uneven and disappointing global growth is a result of all these factors, according to Lagarde.
Low productivity and aging populations will have an effect on midterm prospects as well.
In October 2015, the IMS forecasted that the world’s global economy would grow by 3.6% in 2016. While she did note that the normalization of the United States monetary policy is necessary and healthy for the country, she did state that changes need to be made with efficiency.
The potential of spillover effects due to rising interest rates may harm emerging and developing markets. Lagarde further warned that a stronger dollar and the rising interest rates may cause many international companies to default on their payments.
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