The International Monetary Fund (IMF) has cut global growth forecasts for this year and next, warning that growth remains “sluggish.”
The IMF cut 0.1 percentage points off its estimate for 2019 growth and 0.1 percentage point off its forecast for growth this year. The estimate for 2021 was downgraded by 0.2 percentage points.
The IMF now expects global GDP growth of just 2.9% for 2019, 3.3% in 2020, and 3.4% in 2021.
At its last update in October 2019, the IMF had forecast GDP growth of 3% in 2019 — the slowest rate since the financial crisis — and growth of 3.4% in 2020. The fund said in October it saw a “synchronised slowdown” and those estimates were a downgrade on earlier global growth forecasts.
Monday’s downgrades were driven by a downward revision of India’s economy and increased social unrest around the world last year.
“After a synchronised slowdown in 2019, we expect a moderate pick-up in global growth this year and next,” IMF Managing Director Kristalina Georgieva said at a press conference on Monday. “We already see some tentative signs of stabilisation.
“But we have not reached a turning point yet. Moreover we are revising slightly downwards our October projections for 2019, 2020, 2021. The reality is that global growth remains sluggish.”
Georgieva said the IMF’s current outlook could be summarised as “tentative stabilisation, sluggish recovery.”
“Three months ago, we were concerned the risks were so large they could de-rail growth,” Gita Gopinath, chief economist at the IMF said at a press conference. “Since then, we’ve seen signs of stabilisation.”
Georgieva urged policymakers around the world to continue to keep interest rates low, spend money to boost growth, and pursue reforms to boost high-growth areas of the economy such as fintech.
She added that the start of the new decade was also “eerily reminiscent” of the start of the 1920s, with high inequality, a rapid spread of technology, and high risk and reward in finance. She urged governments around the world to tackle these issues.
The latest edition of the IMF’s bi-annual forecast is timed to coincide with the World Economic Forum (WEF)’s annual meeting in Davos, which begins tonight in Switzerland. Around 3,000 top politicians and business leaders will meet this week to discuss the biggest issues facing the world in 2020. The ongoing climate crisis will feature heavily.
The IMF’s growth forecasts for the United Kingdom were unchanged from October, at 1.4% in 2020 and 1.5% in 2021.