On Tuesday, 9th April, the IMF i.e. The International Monetary Fund cut its forecast of global growth to the lowest level recorded ever since the occurrence of the financial crisis, warning that there will be major downside risks to the economy of the world such as a massive rise in the levels of debt, tensions in trade, a lot of political instability, and increasing inequality.
The IMF has reduced its forecast of growth to 3.3% for the year 2019 from its previous level that was 3.5% in the most up-to-date World Economic Outlook (WEO). For the 3rd time in the same month, the IMF has revised its outlook and all three times it has been downward. The fund is foretelling a decrease in growth in 2019 for almost 70% of the world’s economy.
The Chief Economist at the IMF, Gita Gopinath in a press briefing held in Washington said, “This is a delicate moment,”
The WEO has noted that a 3.3% expansion is “still reasonable”, however, they also warned that the outlook for several countries continues to be “challenging” provided the potential for disputes in trade flare up. Furthermore, the fund warned that growth in China “may surprise on the downside” and also that the chances from Brexit “remain heightened”.
“It’s very important that policymakers do no harm and work cooperatively,” emphasized Gopinath.
Although during the first half of the year, the economy of the world was forecasted to be low, the second half of 2019 is predicted to be better owing to the growth-friendly policies from the central banks.
The IMF has predicted that by 2020, the growth in India and China will stabilize the global growth at around 3.5%.
For the sake of biannual meetings of the International Monetary Fund, policymakers from all over the world shall be gathering this week in Washington, DC.
In its latest WEO, the IMF has laid emphasis on it and said that it is “imperative that costly policy mistakes are avoided”
“There is a need for greater multilateral cooperation to resolve trade conflicts, to address climate change and risks from cybersecurity, and to improve the effectiveness of international taxation,” the report said.