The International Monetary Fund (IMF) has downgraded its forecast for global economic growth to its lowest since the recession on the back of growing risks. In a report published on Tuesday 6 October, in advance of the IMF-World Bank annual meetings in Peru, the fund warned the world economy will only grow by 3.1% in 2015 – the slowest since 2009.
Down from a July forecast of 3.3%, the new figure takes into account falling commodity prices and jumpy financial markets, the fund said. "Downside risks to the world economy appear more pronounced than they did just a few months ago," the fund said in its World Economic Outlook report.
Developing economies to dip on China slowdown
While advanced economies will post their best performance since 2010, emerging market and developing economies and oil-exporting countries are projected to slow for the fifth year in a row, with growth dropping at 4%.
"In an environment of declining commodity prices, reduced capital flows to emerging markets and pressure on their currencies, and increasing financial market volatility, downside risks to the outlook have risen, particularly for emerging market and developing economies," the report stated, highlighting the impact of China's economic slowdown.
The Asian giant's realignment towards consumption and services has compounded pain for countries which export oil and metals, including copper and gold.
At the end of September, IMF chief Christine Lagarde said the prospect of an interest rate hike from the US Federal Reserve, China's economic troubles, slowing global trade, and plunging commodity prices are all contributing to an uncertain economic climate, but said "India was the sole bright spot".
In a speech delivered in Washington on 30 September, she added commodity exporting countries Brazil and Russia faced "serious economic difficulties".