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IMF slashes global growth forecast for 2015-2016 following fall in oil prices

The International Monetary Fund (IMF) today (Tuesday, January 20) sharply cut its 2015/2016 world growth forecast of only six months ago, saying lower oil prices did not offset pervasive weaknesses around the globe.

It said poorer prospects in China, Russia, the euro area and Japan will hold world growth to just 3.5 per cent this year and 3.7 per cent in 2016. That was 0.3 percentage points lower than in its previous World Economic Outlook in October, and underscored the steady deterioration of the economic picture for many countries, due to sluggish investment, slowing trade and falling commodity prices.

While the United States will remain the one bright spot among major economies, Europe will continue to struggle with disinflation, and China’s growth, hit by slower export growth and a real estate slump, will drag to its slowest pace in a quarter-century.

According to the IMF’s chief economist, Olivier Blanchard: “New factors supporting growth – lower oil prices, but also depreciation of euro and yen – are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries”.

Encomium

Written by Encomium

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