Forex Marketz Daily Forex News – Fully Markets Update
The International Monetary Fund, or IMF, released its biannual World Economic Outlook (WEO) on Tuesday. The WEO showed a rather disappointing picture of the performance of the global economy as it cited a number of headwinds.
The IMF cut its 2016 outlook 0.1 percent to 3.1 percent and its 2017 global growth outlook by 0.1 percent to 3.4 percent. They have a more subdued outlook for developed economies, in the wake of Brexit and weaker-than-expected US economic activity. The IMF also warned that renewed political tensions over globalization and anti-integration movements as well as increasing protectionist rhetoric out of the United States will be an impediment to fighting income inequality around the world.
There are a number of Headwinds Looming for the IMF
Some of the main highlights and headwinds on the horizon are downward revisions for the US economy as well as small upgrade for the Eurozone and emerging economies. The WEO report expects the US economy to expand by 1.6 percent in 2016 and 2.2 percent in 2017. This is down from the 2.4 percent 2016 growth and 2.5 percent in 2017, from their earlier report. The Eurozone is expected to pick up to 1.7 percent growth in 2016, up from 1.5 percent and slowing to 1.5 percent from 1.8 percent for next year. Emerging markets were upgraded to 4.2 percent from 4.1 percent this year and the economic growth for 2017 was held steady at 4.6 percent.
Looking at the world’s second largest economy, China, the WEO report upgraded that country’s GDP projection for this year to 6.6 from 6.5 percent growth. The 2017 project was held steady at 6.2 percent. The report made a point to highlight China’s high debt load which poses an enormous risk to their economy and officials should take immediate steps to make vital reforms order to avoid a possible looming correction.
As far as global weakness and headwinds are concerned, the WEO cited weakening demand for and depressed prices in commodities as a major headwind for global economic growth. This headwind remains a major problem for emerging economies with ultra-low levels of inflation.
