Moderate growth continues, with global growth forecast to be slightly down for 2015, reflecting an unexpected setback to economic activity in the first quarter of 2015, mostly in North America, says the IMF’s latest update on the World Economic Outlook released yesterday.
General evolutions are unfolding very much as forecast in April, said Olivier Blanchard, IMF Economic Counselor and Director of Research, “namely, an improving recovery in advanced economies and a slowdown in underlying growth in emerging markets and developing economies.”
Forecasts for the world economy are for 3.3% this year, marginally lower than in 2014, and 3.8% next year.
“As dramatic as the events in Greece are,” Blanchard said, “effects on the rest of the world economy from the further suffering of the Greek economy are likely to be limited.” Of course, he said, “we continue to hope for and work toward a positive solution by which Greece remains in the Eurozone.”
As for other developments, the WEO Update said that oil prices rebounded during the second quarter of 2015, the risk of deflation decreased, and financial conditions for corporate and household borrowers in most advanced economies remained broadly favorable.
The increase in global growth in 2015 will be driven by stronger growth in advanced economies. Growth in these economies is forecast to increase from 1.8% in 2014 to 2.1% in 2015 (falling about 0.3 percentage points short of the forecast in April), and 2.4% in 2016.
Growth in emerging market and developing economies is projected to slow from 4.6% in 2014 to 4.2% in 2015. The slowdown reflects the dampening impact of lower commodity prices and tighter external financial conditions.
In 2016, growth in emerging market and developing economies is expected to pick up to 4.7%, largely on account of the projected improvement in economic conditions in a number of distressed economies, including Russia and some economies in the Middle East and North Africa.