Worsening of the IMF's global outlook


Monday, April 18, 2016 9:17AM/ FBNQuest Research

The IMF’s latest World Economic Outlook (WEO) is entitled “Too Slow for Too Long”. The Fund has again trimmed its forecast for world output growth this year, from 3.4% to 3.2%.

The losers for 2016 include the US (to 2.4% from 2.6%), the Eurozone (to 1.5% from 1.7%), Japan (to 0.5% from 1.0%) and Russia (to -1.8% from -1.0%). India continues to enjoy the highest forecast growth both this year and next.

The projection for China has been raised to 6.5% from 6.3%. On Friday we learnt that its GDP expanded by 6.7% y/y in Q1 2016.

While the IMF sees a pick-up in growth in 2017 and beyond, it is adamant that the risks to its outlook are again tilted to the downside. Principal among the risks is the possibility that the remodeling of the economy in China endures bumps which create global headwinds.

The Fund also cites some obvious political, social and natural hazards, and its fear of rising nationalist and protectionist policies in the US and Europe.

The IMF has cut its growth forecast for Nigeria for this year from 4.1% to 2.3%. For 2017, it has penciled in 3.5%.

Nigerian policymakers will note the Fund’s view that commodity exporters will struggle to restore growth without export diversification. Their opponents might take on board its related view that the process will take time.

The Fund has cut its price assumptions, based on the futures markets, for its basket of three crude blends (including UK Brent), to averages of US$34.8/b this year and US$41.0/b in 2017.

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