INSUBCONTINENT EXCLUSIVE:
The IMF also cut its 2019 growth forecast for developing countries to 4.5 per cent.The International Monetary Fund on Monday cut its world
economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions
could further destabilise a slowing global economy
In its second downgrade in three months, global lender also cited a bigger-than-expected slowdown in China's economy and a possible "No
Deal" Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets.The IMF predicted global economy to
grow at 3.5 per cent in 2019 and 3.6 per cent in 2020, down 0.2 and 0.1 percentage point respectively from last October's forecasts.The new
forecasts, released ahead of this week's gathering of world leaders and business executives in Swiss ski resort of Davos, show that
policymakers may need to come up with plans to deal with an end to years of solid global growth."Risks to global growth tilt to downside
An escalation of trade tensions beyond those already incorporated in forecast remains a key source of risk to outlook," IMF said in an
update to its World Economic Outlook report."Higher trade policy uncertainty and concerns over escalation and retaliation would lower
business investment, disrupt supply chains and slow productivity growth
The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth."The downgrades
reflected signs of weakness in Europe, with its export powerhouse Germany hurt by new fuel emission standards for cars and with Italy under
market pressure due to Rome's recent budget standoff with European Union.Growth in euro zone is set to moderate from 1.8 per cent in 2018 to
1.6 per cent in 2019, 0.3 percentage point lower than projected three months ago, IMF said.The IMF also cut its 2019 growth forecast for
developing countries to 4.5 per cent, down 0.2 percentage point from previous projection and a slowdown from 4.7 per cent in 2018."Emerging
market and developing economies have been tested by difficult external conditions over past few months amid trade tensions, rising US
interest rates, dollar appreciation, capital outflows, and volatile oil prices," IMF said.The IMF maintained its US growth projections of
2.5 per cent this year and 1.8 per cent in 2020, pointing to continued strength in domestic demand.It also kept its China growth forecast at
6.2 per cent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to
wide-reaching sell-offs in financial and commodity markets that place its trading partners, commodity exporters, and other emerging markets
under pressure," it said.Britain is expected to achieve 1.5 per cent growth this year though there is uncertainty over projection, which is
based on assumption of an orderly exit from EU, IMF said.The rare bright spot was Japan, with IMF revising up its forecast by 0.2 percentage
point to 1.1 per cent this year due to an expected boost from government's spending measures, which aim to offset a scheduled sales-tax hike
in October.The IMF has been urging policymakers to carry out structural reforms while global economy enjoys solid growth, with its managing
director, Christine Lagarde, telling them to "fix roof while sun is shining"
The IMF has stressed need to address income inequality and reform financial sector.However, as growth momentum peaks and risks to outlook
rise, policymakers must now focus on policies to prevent further slowdowns, IMF said."The main shared policy priority is for countries to
resolve cooperatively and quickly their trade disagreements and resulting policy uncertainty, rather than raising harmful barriers further
and destabilizing an already slowing global economy," it added.
