International Monetary Fund cuts SA's 2019 economic growth forecast

Marco Green
April 10, 2019

However, the global rescue fund raised the growth forecast for Ireland, by 0.1pc point to 4.1pc this year, but that figure does not allow the risk of the United Kingdom crashing out of the European Union without a deal.

The IMF said a no-deal outcome would have a total negative effect on UK GDP of 3.5 per cent by 2021 compared to the current projection.

China is forecast to grow 6.3% in 2019 and 6.1% in 2020.

In its previous forecast in January, the IMF had predicted that global growth would reach 3.5 per cent this year.

"This is a delicate moment for the global economy", Gita Gopinath, the IMF's chief economist, said at a news conference, while cautioning that the fund does not foresee an worldwide recession.

In more bad news for Europe's biggest economy, the International Monetary Fund said Germany will now grow just 0.8 per cent in 2019, meaning the organisation has cut its growth prediction for the country by over half since October in two consecutive downgrades.

However, the International Monetary Fund predicted there would be a pick-up in growth at the end of 2019 and into 2020, based on "an ongoing buildup of policy stimulus in China, recent improvements in global financial market sentiment [and] the waning of some temporary drags on growth in the euro area".

Gopinath said it was "imperative that costly policy mistakes are avoided".

In its flagship World Economic Outlook (WEO) released on Tuesday in Washington, IMF said the reduction in India's estimate is on account of the "the recent revision to the national account statistics that indicated somewhat softer underlying momentum".

The IMF said it supported the US Federal Reserve's decision to pause its rate-hiking cycle, which the global lender said would support the US and world economies this year by easing financial conditions.

For 2018-19, the multi-lateral institution pegged the economic growth at 7.1 per cent - a shade higher than the official projection of 7 per cent in the second advance estimates.

One potential misstep lies in Britain's indecision over how to leave the European Union.

U.S. tariffs on Chinese imports are hitting Chinese growth and also weighing on Latin America and other areas dependent on Chinese demand for commodities.

The gloomier picture in the IMF's latest World Economic Outlook contributed to a selloff in stocks, with investors concerned that slower global growth could weaken corporate earnings.

The IMF also cut its 2019 growth forecasts for Canada and Latin America as well as for the Middle East and North African countries.

The IMF expects growth in world trade to drop to 3.4 per cent this year - a sharp slowdown from the 4 per cent it had expected in January and from 3.8 per cent trade growth in 2018.

The Fund said continued implementation of structural and financial sector reforms with efforts to reduce public debt remain essential to secure the economy's growth prospects.

Other reports by Click Lancashire

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