IMF warns of 'Triad' of risks facing global economy

• Global growth moderate and uneven, forecast at 3.1 percent this year, 3.6 percent in 2016
• Disparate fortunes between the advanced and emerging market and developing economies
• Lower commodity prices weigh on commodity exporters

The IMF’s latest World Economic Outlook (WEO) foresees lower global growth compared to last year, with modest pickup in advanced economies and a slowing in emerging markets, primarily reflecting weakness in some large emerging economies and oil-exporting countries.

Recovery in advanced economies on course

Growth in advanced economies is projected to increase modestly to 2 percent this year and 2.2 percent next. This modest increase primarily due to declining oil prices, accommodative monetary policy, and improved financial conditions, and in some cases, currency depreciation.

Slower growth in emerging and developing economies

Growth prospects in emerging markets and developing economies vary across countries and regions. But the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6 percent in 2014 to 4.0 percent in 2015.

Growth in low-income developing economies is expected to slow to 4.8 percent in 2015, from 6 percent in 2014,

Downside risks more significant

The WEO report outlines important shifts that could stall global recovery. These include:

• Lower oil and other commodity prices, which although benefiting commodity importers, complicate the outlook for commodity exporters, some of whom already face strained initial conditions (e.g., Russia, Venezuela, Nigeria).

• A sharper-than-expected slowdown in China  if the expected re balancing toward a more market-based and consumption-driven growth proves more challenging than expected.

• Disruptive asset price shifts and a further increase in financial market volatility could involve a reversal of capital flows in emerging market economies.

• A further appreciation of the U.S. dollar could pose balance sheet and funding risks for dollar debtors, especially in some emerging market economies,

• Increased geopolitical tensions in Ukraine, the Middle East, or parts of Africa could take a toll on confidence.

 

source : IMF website