The International Monetary Fund (IMF) has downgraded its assessment of global economic growth from 3.4 per cent to 3.3 per cent.
Although the IMF still expects the flagging global economy to pick up this year, there are issues of concern such as weakness in emerging markets with economies that will not be as resilient as expected. For instance in India, domestic demand has slowed more sharply than expected and consequently the economy is expected to grow by about 5.8 per cent in 2020. The global economy is also facing headwinds from growing social unrest in the Middle East and South America, and the IMF has moderated expectations for growth in Mexico, Chile and South Africa. However, there are grounds for optimism on a number of fronts including the truce and partial trade agreement between the US and China. There are also tentative signs that global manufacturing is recovering and the damaging consequences of a hard Brexit have been averted for now. The outlook for the world's largest economy is stable, but with growth in the US expected to fall from 2.3 per cent in 2019 to 2 per cent in 2020. The IMF's report is based on tentative evidence and bits and pieces of a jigsaw without a clear overall picture, and therefore the expected recovery is not necessarily a given as things could still go wrong. As if to underline this possibility, the IMF also downgraded its assessment of economic growth in 2021 by 0.2 percentage points to 3.4 per cent.