International Monetary Fund cuts economic growth forecasts

The International Monetary Fund cut its growth projections Tuesday for the world and the United States this year from its earlier estimates in October, citing a drag from slowdowns in emerging economies such as China.

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In its revision to the semiannual World Economic Outlook, the Washington-based lender said it kept its 2016 forecast for Japan's expansion unchanged from the October report thanks to factors such as support for the economy from the government and the central bank.

The IMF said the global economy will grow 3.4 per cent in 2016 in terms of real gross domestic product, down 0.2 percentage point from the earlier estimate. The world expanded 3.1 per cent in 2015, it said.

"The picture for emerging market and developing economies is diverse but in many cases challenging," the IMF said in the update of the October report, expecting the global economy to expand 3.6 per cent in 2017, also revised down 0.2 point.

China's efforts to change structure from an economy led by exports and infrastructure investment to a consumption-oriented economy are among the factors that will continue to "weigh on growth prospects" in 2016 and 2017, the IMF said.

The IMF slashed its growth projections for the United States by 0.2 point to 2.6 per cent both in 2016 and 2017. The U.S. growth rate for 2015 came to 2.5 per cent, it said.

The Japanese economy is expected to expand 1.0 per cent in 2016, unchanged from the earlier projection, and 0.3 per cent in 2017, down 0.1 point, the IMF said, noting Japan expanded 0.6 per cent last year.

Growth in Japan is "expected to firm in 2016, on the back of fiscal support, lower oil prices, accommodative financial conditions, and rising incomes," the IMF said.

The emerging and developing economies will expand 4.3 per cent overall this year following 4.0 per cent growth last year, and 4.7 per cent in 2017, the IMF said. The projections for 2016 and 2017 were both down 0.2 point from the earlier forecasts.

The IMF expects China to grow 6.3 per cent in 2016 and 6 per cent in 2017, both unchanged from the October announcement. China grew 6.9 per cent in 2015, according to the IMF.


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