With Brazil's economy projected to decline 3.5% this year and China's growth expected to hover around 6.3%, the International Monetary Fund once again cut its outlook for the world economy, warning Tuesday that the economic turmoil in China and financial contagion throughout emerging markets threaten to curb global growth.
Deeper downturns in many of the world’s largest developing countries and a weaker-than-expected expansion in the US prompted the IMF to downgrade its forecast for global growth this year by 0.2 percentage point to 3.4%. That is still an improvement from last year’s 3.1% growth rate.
“It is going to be a year of great challenges,” IMF chief economist Maurice Obstfeld said as the fund published an update to its World Economic Outlook. “Unless the key transitions in the world economy are successfully navigated, global growth could be derailed.”
Taking a closer look, the IMF predicts the US economy will grow 2.6% this year, with Germany gaining 1.7%. Other countries and their growth rates or lack thereof include: France, +1.3%; Italy 1.3%; Spain, 2.7%; Japan, 1%; UK, 2.2%; Canada, 1.7% and Russia, -1%.
The brightest outlook is for India, which is expected to see its economy grow 7.5%, after gaining 7.3% last year.