IMF cuts 2019 global growth outlook

The International Monetary Fund (IMF) on January 21 cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets.
India's growth projection for 2019 was, however, raised by 10 basis points to 7.5 per cent, reports Money Control.
"India's economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease," IMF said in its latest World Economic Outlook update.
The IMF predicted the global economy to grow at 3.5 per cent in 2019 and 3.6 per cent in 2020, down 0.2 and 0.1 percentage point respectively from last October's forecasts.
India's growth estimate for 2018 has been retained at 7.3 per cent while for 2020 it has been retained at 7.7 per cent.
In its second downgrade in three months, the global lender also cited a bigger-than-expected slowdown in China's economy and a possible "No Deal" Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets.
The new forecasts, released ahead of this week's gathering of world leaders and business executives in the Swiss ski resort of Davos, show that policymakers may need to come up with plans to deal with an end to years of solid global growth.
"Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook," the IMF said in an update to its World Economic Outlook report.
"Higher trade policy uncertainty and concerns over escalation and retaliation would lower business investment, disrupt supply chains and slow productivity growth. The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth."
The downgrades reflected signs of weakness in Europe, with its export powerhouse Germany hurt by new fuel emission standards for cars and with Italy under market pressure due to Rome's recent budget standoff with the European Union.
Growth in the eurozone is set to moderate from 1.8 per cent in 2018 to 1.6 per cent in 2019, 0.3 percentage point lower than projected three months ago, the IMF said.
The IMF also cut its 2019 growth forecast for developing countries to 4.5 per cent, down 0.2 percentage point from the previous projection and a slowdown from 4.7 per cent in 2018.
"Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising U.S. interest rates, dollar appreciation, capital outflows, and volatile oil prices," the IMF said.
The IMF maintained its US growth projections of 2.5 per cent this year and 1.8 per cent in 2020, pointing to continued strength in domestic demand.
It also kept its China growth forecast at 6.2 per cent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to spur growth by boosting fiscal spending and bank lending.
"As seen in 2015-16, concerns about the health of China's economy can trigger abrupt, wide-reaching sell-offs in financial and commodity markets that place its trading partners, commodity exporters, and other emerging markets under pressure," it said.
Britain is expected to achieve 1.5 per cent growth this year though there is uncertainty over the projection, which is based on the assumption of an orderly exit from the EU, the IMF said.
The rare bright spot was Japan, with the IMF revising up its forecast by 0.2 percentage point to 1.1 per cent this year due to an expected boost from the government's spending measures, which aim to offset a scheduled sales-tax hike in October.
The IMF has been urging policymakers to carry out structural reforms while the global economy enjoys solid growth, with its managing director, Christine Lagarde, telling them to "fix the roof while the sun is shining". The IMF has stressed the need to address income inequality and reform the financial sector.