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The International Monetary Fund lowered its forecasts for global economic growth this year and the following year, due to growing trade protectionism and instability in emerging markets.
The risks to which the Fund had warned this year – "such as the removal of trade barriers and the reversal of capital flows to emerging market economies with lower fundamentals and increased political risk" – become more pronounced or partially materialized, "the IMF said in the newspaper. publication of its World Economic Outlook – its flagship global economic forecasts.
The revisions had been announced by IMF Managing Director Christine Lagarde, who saw the outlook darken, saying in a speech last week that "the global economic climate is beginning to change."
The predictions set the stage for this week's discussions at the IMF and World Bank annual meetings, where central bankers and finance ministers from around the world will meet in Indonesia to discuss prospects for the IMF. world economy, among other topics.
While many ministers are worried about the risks associated with the rise of trade protectionism over the last year and a half, this series of forecasts shows that tariffs are starting to be felt. The measures have been implemented by the United States and other countries have responded by applying their own tariffs.
World trade has suffered. Last year, the volume of world trade increased by 5.2%, the best year since the months of 2010 and 2011 after the global financial crisis. This year, the exchanges are posting good for growth of 4.2%, a decrease of 0.9 percentage points compared to the April forecast.
"We have had bad news and the likelihood that we are attaching to other bad news has increased," said Maurice Obstfeld, chief economist of the IMF, during a briefing with reporters.
The IMF expects US growth to reach 2.9 percent this year, unchanged from its previous forecasts.
The Chinese economy is expected to grow by 6.6 percent this year, unchanged from previous forecasts, and by 6.2 percent next year.
Forecasts have declined for growth in the euro area and for many emerging markets, but are not lower everywhere. Saudi Arabia and Russia are expected to experience stronger growth.
The euro area economy is expected to grow by 2% this year, compared to 2.2% in July.
IMF forecasts have also been weighed down by emerging market economies, which have been volatile over the last six months. The back of the dollar, up nearly 10% this year, was the decline in currencies in emerging markets, which led to higher prices for their imports, making it more difficult to manage their dollar-denominated debt and central banks to raise their rates sometimes too much savings.
The Argentine economy is expected to contract sharply this year and next year.
Turkey's economy is expected to grow only 0.4% next year, up from 7.4% last year.
While long-term forecasts are notoriously unreliable, forecasts for 2018 account for almost three-quarters of economic data.
Despite turbulence in emerging markets, the global economy entered this period with a surge of vigor. Last year, almost all economies experienced synchronized growth, which helped the economy to better weather this year's turbulence. The IMF expects a slowdown but not a catastrophe. In particular, the IMF said it was unlikely that emerging market turmoil would spread.
"We do not believe that the current problems will affect countries with stronger fundamentals," Obstfeld said.
Write to Josh Zumbrun at [email protected]
