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Just three months ago, the International Monetary Fund (IMF) had been rather optimistic about the state of the global economy. In its World Economic Outlook (WEO) in April, the IMF had forecast an acceleration to 3.9% for the current year and the next, the fastest since 2011. In addition He noted that "this broad and strong growth has not since the beginning of 2010, the recovery of the financial crisis of 2008-2009 was marked by a sharp rebound. "
Unfortunately, his latest WEO is much less optimistic.While the IMF has maintained its global growth projections, he cautioned that risks to the outlook are" rising "and that expansion is becoming less While the global cyclical recovery is approaching its two year mark, the pace of expansion in some economies appears to have peaked and growth has become less synchronized across countries, "the report said.
In fact, the IMF has downgraded its forecasts for advanced economies such as the Eurozone, Japan, and the United Kingdom, as well as India, Argentina, and Brazil [19659004]strong crosswinds "in recent months, courtesy factors such as higher yields in the United States, the appreciation of the dollar, escalating trade tensions, geopolitical conflicts and the rising oil prices. The latter is also up 16% between February 2018 – the reference period for WEO from April 2018 – and early June 2018.
Although India should still be the main economy to the fastest growth in 2018 and 2019 main driver of global growth, the IMF is forecasting a slight deceleration of the economy. "India's growth rate is expected to increase from 6.7% in 2017 to 7.3% in 2018 and 7.5% in 2019, under the effect of the growth and development initiative. exchange of currency and the introduction of the goods and services tax, a lower percentage point for 2018 and 2019, respectively, than in the WEO of April, reflecting the negative effects of the rise in oil price on domestic demand and monetary policy tightening faster than expected due to higher expected inflation. "Data released yesterday reveal that wholesale-price inflation has reached 5.77% in June, due to higher prices for vegetables and fuels.In comparison, inflation based on the wholesale price index was 4.43% in May and 0 , 90% in June 2017. Meanwhile, the price of Indian crude has risen from $ 66 per barrel in April to about $ 74 currently.
Recognizing these risks, the Res Bank of India Bank last month raised the interest rate by 0.25% – the first rise in more than four years – in its second monetary policy review for the fiscal year.
continues to outperform China. According to the IMF, growth in China is expected to increase from 6.9 percent in 2017 to 6.6 percent in 2018 and 6.4 percent in 2019, as regulatory tightening in the financial sector sets in and demand increases. outside softens.
WEO sees emerging and developing Asia maintain its "strong performance", posting a growth rate of 6.5% in 2018-2019. "Growth in the ASEAN-5 economies group is expected to stabilize around 5.3% as domestic demand remains healthy and exports continue to recover," the report said, adding that "in the United States, the economy is expected to strengthen temporarily as forecast in the April Economic Outlook, with projected growth of 2.9% in 2018 and 2.7% in 2019. "
Significantly, then While the baseline forecast for global growth is broadly unchanged, the IMF warns that growth has plateaued and short-term risks have increased. "But the risk that current trade tensions will worsen – with negative effects on confidence, asset prices and investments – is the biggest threat to global growth," said Maurice Obstfeld, chief economist IMF. the imbalances should worsen "because of the relatively strong growth in demand in the United States, perhaps exacerbating friction."
WEO's latest report comes as US President Donald Trump is considering Increase the tariff war. It has already imposed very high tariffs on $ 34 billion in imports from China, and an additional $ 200 billion is expected to be paid as early as September, in addition to duties on steel and steel. 39, aluminum all over the world, including major allies. China matched US dollar-for-dollar tariffs and threatened to take other measures to fight back. In addition, US exports face retaliation from Canada, Mexico, Japan and the European Union.
"Our modeling suggests that if current trade policy threats materialize and business confidence declines, world output could be 0.5% lower." According to the report, "in addition to its immediate impact on the market, Proliferation of trade measures could increase uncertainty about the potential magnitude of trade actions, thus impeding investment. Trade barriers would make tradable goods less affordable, disrupt global supply chains, and reduce trade barriers. would slow down the spread of new technologies, thereby reducing productivity. "
In this context, the IMF notes that it is even more urgent to advance policies and reforms" expand current expansion and strengthen the resilience to reduce the possibility of disruptive disturbance ". He added that "without comprehensive measures to increase potential output and to ensure that benefits are shared by all, the disenchantment with existing economic arrangements may well favor more introverted policies that undermine growth." The solution, according to the IMF, lies in multilateral cooperation. This will play a vital role in preserving global expansion and strengthening medium-term prospects.
The IMF's specific recommendations for emerging and developing economies such as India include tightening excess credit growth, supporting healthy bank balance sheets and maintaining orderly market conditions in the face of heightened volatility. There is a need to improve resilience through a combination of fiscal, monetary, currency and prudential policies to reduce vulnerability to tighter global financial conditions, sharp currency swings and reversals of capital flows. "To increase potential growth and enhance inclusiveness, structural reforms remain essential to reduce infrastructure bottlenecks, strengthen the business environment, improve human capital and ensure access to opportunities." for all segments of society ". PTI Inputs
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