WASHINGTON: The International Monetary Fund (IMF) on Tuesday projected a gradual increase in the global economy, from 3.1 per cent in 2015, to 3.4 per cent in 2016 and 3.6pc in 2017.
The Fund’s World Economic Outlook report for 2016 also projected that this increase will be more visible in emerging markets and developing economies.
Growth in advanced economies is projected to rise by 0.2 percentage point in 2016 to 2.1, and hold steady in 2017.
“The slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in some large emerging market economies will continue to weigh on growth prospects in 2016–17,” the IMF said.
A gradual improvement of growth rates in countries currently in economic distress – notably Brazil, Russia, and some countries in the Middle East – would contribute to this gradual increase in the global economy, the report added.
The IMF noted that in 2015, global economic activity remained subdued. Growth in emerging markets and developing economies—while still accounting for over 70pc of global growth —declined for the fifth consecutive year, while a modest recovery continued in advanced economies.
The report underlined three key transitions that continue to influence the global outlook: the rebalancing in China, lower prices for energy and other commodities, and a gradual tightening in monetary policy in the US.
Growth in China is expected to slow to 6.3pc in 2016 and 6.0pc in 2017, primarily reflecting weaker investment growth as the economy continues to rebalance.
India and the rest of emerging Asia are generally projected to continue growing at a robust pace, although with some countries facing strong headwinds from China’s economic rebalancing and global manufacturing weakness.
Higher growth is projected for the Middle East, but lower oil prices, and in some cases geopolitical tensions and domestic strife, continue to weigh on the outlook.
In the Middle East, prospects are hurt by lower oil prices.
In the US, growth momentum is now expected to hold steady rather than gather further steam.
Prospects for global trade growth have also been marked down by more than 1/2 percentage point for 2016 and 2017, reflecting developments in China as well as distressed economies.