Global growth will slow down. The advanced economies, led by the euro zone, are struggling and the Sino-US commercial dispute continues, leading the IMF to lower its forecasts for 2019, with a hope of a rebound next year.
The global economy is expected to grow 3.3 percent, down 0.2 percentage points from January’s forecast and 0.4 percentage point lower than October, the International Monetary Fund said Tuesday. (IMF) after the 3.6% achieved in 2018.
The list of countries and regions whose growth forecasts have been lowered is long: United States, Eurozone, United Kingdom, Japan, Canada, Latin America, Middle East, etc. The slowdown is now synchronized affecting “70% of the world economy,” said IMF chief economist Gita Gopinath in a blog.
In the United States, where growth is expected to fall to 2.3% (-0.2 points) after 2.9% last year, the institution notes that the effects of measures to stimulate the economy are fading away. budget expenditures are smaller than expected.
In the euro zone, the confidence of households and businesses has been eroded. Germany, whose growth could lose 0.5 point to 0.8%, sees the production of its automotive sector strongly disrupted by new polluting emissions standards. In Italy, where growth could fall to 0.1% (-0.5 points), investments fell.
The United Kingdom is facing its difficult exit from the European Union. Its economy is expected to fall to 1.2% (-0.3 points).
In Latin America, the growth of the second-largest economy, Mexico, was sharply down (-0.5 points) to 1.6%, “reflecting the changes in policy perception” of the new government, notes the IMF.
Argentina, another major economy in the region that has obtained a program of financial assistance from the IMF, will remain in recession in the first half before an expected recovery in the second half thanks to a rebound in agricultural production.
Venezuela, ravaged by a political and economic crisis, continues to sink into the recession that could reach -10% in 2020, “a significant weight for the region,” the IMF admits.
On the positive side, the Washington institution notes the measures announced by the Chinese authorities to boost their economy, which should translate into slightly stronger growth than expected in January at 6.3% (+0.1%). point).
Above all, the United States and China are observing a trade truce since early December that led Beijing to lift some customs surcharges on the US automobile and the Trump administration to not increase its customs duties on 200 billion euros on 1 March. Chinese imports.
Moreover, welcomes the IMF, a number of central banks, starting with the US Federal Reserve (Fed), have marked a healthy break in rising interest rates.
These elements underpin the IMF’s optimism for 2020: global growth could rebound to 3.6%.
“Global growth is at a delicate moment,” says IMF chief economist Gita Gopinath in a blog that echoes the words of CEO Christine Lagarde last week.
For now, the United States and China have still not managed to sign a trade agreement ending their conflict. In addition, recent stimulus measures for the Chinese economy must demonstrate their effectiveness and the economic recovery in countries such as Argentina and Turkey must materialize.
Elsewhere in Europe, a recession in Italy is not excluded, which would further slow down the entire region. And Brexit “hard”, ie without agreement with the European Union, would be fraught with consequences.
The moment is all the more delicate as global growth also comes up against geopolitical tensions in the Middle East, says the IMF, pointing out US sanctions in Iran, civil strife and conflicts in Syria and Yemen.
If the IMF does not see a global recession in the short term, “many economies are not resilient enough,” warned Christine Lagarde, urging countries to prepare for the next recession by erecting barriers of protection and adopting necessary reforms while the economy is still doing relatively well.
