The International Monetary Fund provided a grim outlook for the global economy on Tuesday, downgrading global growth to 3.3 percent for 2019, the lowest since the financial crisis in 2009.
The IMF World Economic Outlook report “projects a slowdown in growth in 2019 for 70 percent of the world economy,” IMF chief economist Gita Gopinath said in a statement. However, “global recession is not in the baseline.”
The forecast is set to remain rather steady overall, with the economic growth projection for next year set to moderate. The projection is down from the 3.5 percent prediction provided by the IMF in January, and from the 3.9 percent anticipated a year ago. In 2020, global growth is projected to pick back up to 3.6 percent, given risk factors remain minimal.
With the global expansion losing steam, what should countries do? – IMF's Gopinath at the release of the April 2019 World Economic Outlook. #WEO https://t.co/c3e88wqrRA pic.twitter.com/Hi26vshACx
— IMF (@IMFNews) April 9, 2019
The latest’s projection is the third time the IMF has downgraded its outlook in six months. Reflecting on the latter half of 2018, the decline in economic growth can be attributed to a number of global issues that are continuing to weigh on financial stability, such as risk associated with developing economic situations, including Brexit, trade tensions and the crisis in Venezuela.
Trade tensions attributed to high tariffs have instigated a lack of business confidence, worsening financial market sentiment, the IMF reported. Stress on emerging economies developed into a tightening for financial conditions in advanced economies as well, weighing on overall global demand.
The view of the IMF is that conditions have eased somewhat in 2019, with the U.S. Federal Reserve taking a policy direction which aims to provide a more accommodative monetary stance and a tightening on monetary policy. Global markets have also grown optimistic about a U.S.-China trade deal.
Growth in advanced economies will slow slightly in 2020, despite a partial recovery in the euro area, as the impact of US fiscal stimulus fades and growth rates approach the modest potential for the group. #WEO https://t.co/IBo3jmG6z3 pic.twitter.com/SUJnza1MtF
— IMF (@IMFNews) April 9, 2019
Brexit has weighed on investment and lowered global economic outlook on the U.K., but when asked to elaborate on projections regarding Brexit, IMF panelists were hesitant to provide projections and could speak only to waiting and hoping for a deal in the near future.
A similar stance was said for the Venezuela crisis, which has adverse effects on the economy in Latin America due to its scope and the role oil plays in the Venezuelan economy. There are few projections for Venezuela other than a certainty that economic strife is carrying over into 2019.
The latter situations and uncertainty regarding trade, particularly between China and the United States, put developing and emerging economies at risk for recovery in 2020, according to Gopinath.