The International Monetary Fund (IMF) cut its global growth estimate for 2019 to 2.9 percent and its estimate for 2020 to 3.3 percent, a 0.1 percent cut for both figures from the organization’s forecasts in October last year.
The global economy is expected to pick up in 2021 to 3.4 percent growth, the IMF’s World Economic Outlook said, although this projection is a 0.2 percent decrease from its previous outlook.
“The growth markdown largely reflects a downward revision to India’s projection, where domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth,” the report said.
Overall, the IMF noted that the slower global growth forecasts were a reflection of a “return closer to historical norms for a group of underperforming and stressed market and developing economies.”
The fund also noted that growth is heavily dependent on healthy emerging market economies maintaining robust growth even as advanced economies and the Chinese economic juggernaut continue to slow down.
Estimates from the IMF place the effect that global monetary stimulus, cash injected by central banks into their respective economies, as a positive 0.5 percent effect on global growth.
Recovery will be supported by trade growth and an increase in domestic demand and investment, along with the removal of some temporary drags on the automobile and technology sectors, the fund said.
Growth in the Middle East and Central Asia region is expected to hit 2.8 percent in 2020, a 0.1 percent down revision from October, with 3.2 percent estimated in 2021. The fund noted that the downgrade was mostly a reflection of Saudi Arabia’s expectation of reduced oil output in line with oil supply cuts made under the OPEC+ deal.
The fund added that its growth forecast “depends to an important extent” on further escalation in the US-China trade war being avoided, along with avoiding US-China economic relations deteriorating any further – with special note to the tech sector.
Avoiding a no-deal Brexit, along with containing the economic consequences of social unrest and geopolitical tensions were also pointed to as important factors in achieving growth.