World economy is slowing faster than expected, warn IMF, CEOS

WASHINGTON/LONDON Corporate executives joined the International Monetary Fund in warning the global economy is slowing faster than expected, establishing a downbeat tone for this week’s annual meeting of the World Economic Forum.

Hours after the IMF cut its forecasts for the world economy this year and next, Pricewaterhousecoopers LLP released a survey showing 30 per cent of business leaders expect the expansion to weaken, about six times the number of a year ago.

“The world economy is growing more slowly than expected, and risks are rising,” IMF managing director Christine Lagarde told reporters in Davos, Switzerland, the home of the conference of policy-makers, investors and executives, which begins Tuesday.

The outlooks were published the same day China revealed the slowest expansion since 2009 last quarter and come at a time when investors are questioning the sustainability of demand as it’s buffeted by the trade war and other political flashpoints such as Brexit and the U.S. government shutdown.

In executing its second downgrade in three months, the IMF predicted global growth of 3.5 per cent this year, below the 3.7 per cent expected in October and the rate in 2018. Among major economies, the deepest revision was for Germany, which the IMF now sees expanding 1.3 per cent this year, down 0.6 per centage point from October.

The unease is spreading to the board room with North American executives especially worried, according to PWC. The number of them declaring themselves optimistic fell to 37 per cent from 63 per cent last year.

In an interview, PWC chairman Bob Moritz said “confidence is waning” amid rising trade tensions and protectionism.

Thirty-five per cent of CEOS cited the concern about over-regulation as the top threat; “policy uncertainty” came a close second.

The survey of CEOS in 91 territories was conducted online, in person and by phone in September and October.