News ID: 128446
Published: 0903 GMT October 06, 2015

International Monetary Fund downgrades world growth forecast

International Monetary Fund downgrades world growth forecast

The International Monetary Fund (IMF) has downgraded its forecast for global economic growth, noting that falling commodity prices and jumpy financial markets have raised global risks.

In a report released on Tuesday in advance of the IMF-World Bank annual meeting scheduled for this week in Lima, Peru, IMF said the world economy will grow 3.1 percent this year, AFP reported.

The figure is lower than IMF’s previous forecast of 3.3 percent in July and is also the slowest since the recession started in 2009.

"Downside risks to the world economy appear more pronounced than they did just a few months ago," IMF said in its World Economic Outlook report.

The world body predicted that the United States will see an economic growth of 2.6 percent this year, showing increase compared to a July forecast of 2.5 percent.

Emerging market economies will likely grow 4 percent, which would mark the fifth straight annual drop in their growth figure. Emerging economies have been hurt by an economic slowdown in China, which has reduced the world’s second biggest economy’s demand for raw materials coming from emerging markets and reduced prices of commodities like copper and oil.

IMF also predicted that the Brazilian economy will contract by 3 percent this year while Russia’s economy is expected to shrink 3.8 percent due to lower oil prices and economic sanctions imposed on Russia by the West over the crisis in Ukraine.

Collapsing energy prices will also hurt Canadian economy, IMF said, while downgrading its forecast for the country’s growth by half a percentage point to 1.5 percent this year.

IMF, however, foresaw continued improvement in Europe, keeping its forecast for 1.5 percent growth this year in the 19 countries that share the euro currency.

The Japanese economy, according to IMF report, is expected to grow 0.6 percent this year. Although Japan’s figure is lower that IMF's July forecast of 0.8 percent, it shows improvement compared to last year when it shrank 0.1 percent.

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