WASHINGTON – The International Monetary has cut its forecast for global economic growth in 2016.
Citing weakness in the developing world, the IMF said Tuesday that the world economy will grow 3.4 per cent, down from an October forecast of 3.6 per cent. The international lending agency downgraded the outlook for developing economies to 4.3 per cent growth from a forecast of 4.5 per cent in October.
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The world economy grew 3.1 per cent and developing economies 4 per cent in 2015. Both figures were the weakest since the recession year 2009. China’s slowing economy and falling commodity prices have hurt countries in the developing world that export raw materials.
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Since the 2008 financial crisis and the Great Recession, the IMF, the World Bank and others have consistently overestimated the strength of the world economy and have later had to downgrade their initial predictions. Earlier this month, the World Bank cut its forecast for global growth to 2.9 per cent from the 3.3 per cent growth it expected last June.
The IMF on Tuesday said it trimmed its forecast for U.S. economic growth to 2.6 per cent this year from 2.8 per cent, noting the prospect of higher American interest rates. In December, the Federal Reserve raised the short-term interest rate it controls from near zero, where it had been since December 2008.
It kept its 2016 forecast for China’s economy unchanged at 6.3 per cent. Since expanding 10.6 per cent in 2010, the Chinese economy has slowed steadily. The government in Beijing said Tuesday that the world’s second-biggest economy grew 6.9 per cent in 2015, slowest in a quarter century.