UU..SS.. aam­moon­ngg oonnl­lyy bbr­ri­ig­gh­htt ssp­poottss wwi­it­thh ++33..66%%

Financial Mirror (Cyprus) - - FRONT PAGE -

As the world’s rich and pow­er­ful gather at Davos this week, the IMF had a mes­sage for them and other world lead­ers. The agency fol­lowed the World Bank’s decision to down­grade the world’s grow rate.

And the IMF did take the tim­ing of Davos to pass along the fore­cast, its follow up to the Oc­to­ber 2014 World Eco­nomic Out­look

Global growth is fore­cast to rise mod­er­ately in 2015-16, from 3.3% in 2014 to 3.5% in 2015 and 3.7% in 2016, re­vised down by 0.3% for both years rel­a­tive to the Oc­to­ber 2014 World Eco­nomic Out­look (WEO).

As with the World Bank as­sess­ment, the U.S. was among the only bright spots.

For 2015, the U.S. eco­nomic growth has been re­vised up to 3.6%, largely due to more ro­bust pri­vate do­mes­tic de­mand, the IMF re­port said.

Cheaper oil is boost­ing real in­comes and con­sumer sen­ti­ment, and there is con­tin­ued support from ac­com­moda­tive mon­e­tary pol­icy, de­spite the pro­jected grad­ual rise in in­ter­est rates. In con­trast, weaker in­vest­ment prospects weigh on the euro area growth out­look, which has been re­vised down to 1.2%, de­spite the support from lower oil prices, fur­ther mon­e­tary pol­icy eas­ing, a more neu­tral fis­cal pol­icy stance, and the re­cent euro de­pre­ci­a­tion. In Ja­pan, where the econ­omy fell into tech­ni­cal re­ces­sion in the third quar­ter of 2014, growth has been re­vised down to 0.6%. Pol­icy re­sponses, to­gether with the oil price boost and yen de­pre­ci­a­tion, are ex­pected to strengthen growth in 2015–16.

The prob­lems in Ja­pan and the euro area are sim­ply con­tin­u­a­tions of trou­bles since the Great Re­ces­sion although there was a brief pe­riod when the forecasts for Europe im­proved.

As China an­nounced 2014 GDP growth of 7.4% for 2014, the IMF be­came more pes­simistic about its prospects: “The growth fore­cast for China, where in­vest­ment growth has slowed and is ex­pected to mod­er­ate fur­ther, has been marked down to be­low 7%. The au­thor­i­ties are now ex­pected to put greater weight on re­duc­ing vul­ner­a­bil­i­ties from re­cent rapid credit and in­vest­ment growth and hence the fore­cast as­sumes less of a pol­icy re­sponse to the un­der­ly­ing mod­er­a­tion. This lower growth, how­ever, is af­fect­ing the rest of Asia.”

China ex­ists in a strange sit­u­a­tion where 7% GDP growth of the world’s sec­ond largest na­tion eco­nom­i­cally is a dis­ap­point­ment. How­ever just a year ago it and other large emerg­ing na­tions were sup­posed to be the en­gines of global eco­nomic ex­pan­sion.

And, the news about Rus­sia was as ex­pected: “Rus­sia’s eco­nomic out­look is much weaker, with growth fore­cast down­graded to -3.0% for 2015, as a re­sult of the eco­nomic im­pact of sharply lower oil prices and in­creased geopo­lit­i­cal ten­sions.

Sanc­tions and oil prices con­tinue to take their tolls.

For the time be­ing, the “growth po­si­tion has been passed back to the U.S.


Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.