WASHINGTON, The global economy is now in a “synchronized slowdown” with growth for 2019 downgraded to 3.0 percent, “its slowest pace since the global financial crisis” in part because of “rising trade barriers and increasing geopolitical tensions,” an International Monetary Fund (IMF) report showed Tuesday.
In its World Economic Outlook (WEO) “Global Manufacturing Downturn, Rising Trade Barriers,” it noted that this “subdued” growth is a consequence of “rising trade barriers; elevated uncertainty surrounding trade and geopolitics; idiosyncratic factors causing macroeconomic strain in several emerging market economies; and structural factors, such as low productivity growth and aging demographics in advanced economies.” It indicated that global growth in 2020 is projected to improve “modestly” to 3.4 percent, a downward revision of 0.2 percent from the April projections, but “unlike the synchronized slowdown, this recovery is not broad based and is precarious.” Growth for advanced economies is projected to slow to 1.7 percent in 2019 and 2020, while emerging market and developing economies are projected to experience a growth pickup from 3.9 percent in 2019 to 4.6 percent in 2020, according to the WEO.
“About half of this is driven by recoveries or shallower recessions in stressed emerging markets, such as Turkey, Argentina, and Iran, and the rest by recoveries in countries where growth slowed significantly in 2019 relative to 2018,” the report noted.
It stressed that a notable feature of a “sluggish” growth in 2019 is “the sharp and geographically broad-based slowdown in manufacturing and global trade, indicating that “trade volume growth in the first half of 2019 is at one percent, the weakest level since 2012.” It added that advanced economies continue to “slow toward their long-term potential, where for the US, trade related uncertainty has had “negative effects on investment,” whereas in the euro area, growth has been downgraded “due to weak exports, while Brexit-related uncertainty continues to weaken growth in the United Kingdom.” It showed that some of the biggest downward revisions for growth are for advanced economies in Asia, “a common factor being their exposure to slowing growth in China and spillovers from US-China trade tensions.” The report stressed that “with a synchronized slowdown and uncertain recovery, the global outlook remains precarious.” “At three percent growth, there is no room for policy mistakes and an urgent need for policymakers to cooperatively deescalate trade and geopolitical tensions,” it said.
According to the WEO, Growth in the Middle East and Central Asia region is expected to be 0.9 percent in 2019, rising to 2.9 percent in 2020. It affirmed that the impact on growth of the recent attacks on Saudi Arabia’s oil facilities “is difficult to gauge at this stage but adds uncertainty to the near-term outlook.”
Source: Kuwait News Agency