IMF report cuts growth forecast
The International Monetary Fund has trimmed its global economic growth projection for 2014, projecting a slower advance in the United States and a less optimistic outlook for several emerging markets.
The Washington-based IMF cut its world forecast Thursday to a 3.4 percent advance this year, down three-tenths of a percentage point from its earlier projection. But with somewhat stronger growth expected in advanced economies in the coming months, the IMF maintained its 4 percent growth projection for 2015.
In the update of its world economic outlook, the IMF said “downside risks” remain a worry for the world economy, including the possibility that geopolitical turmoil could lead to sharply higher oil prices. It said the global economic advance could be weaker for a longer period of time “given the lack of robust momentum” in advanced economies, even though policy-makers have been keeping interest rates for borrowers at very low levels for an extended period.
The IMF said global growth weakened more than expected in the first three months of this year, leading to the lower projection for all of 2014. It said a harsh winter and higher-than-expected business inventories in the United States led to its economic contraction in the first quarter, but said the world’s largest economy has been advancing since then.
The report said domestic demand eased in China, the second biggest economy, and economic activity “decelerated sharply” in Russia as tensions grew over Moscow’s involvement in neighboring Ukraine.
The IMF predicted 4.6 percent growth in emerging markets and developing countries this year – down slightly from an earlier projection – but quickening to a 5.2 percent advance in 2015.
(IMF headquarters building at 1900 Pennsylvania Avenue in Washington, DC. Photo: AgnosticPreachersKid/Wikimedia Commons)