Emerging markets face uneven outlook
DEVELOPING nations continue to be the backbone of global growth, but face a series of headwinds including a slowdown in China, weak demand in advanced economies, low commodity prices and political strife, the International Monetary Fund warned.
The IMF said the outlook for emerging markets was lopsided, with India a bright spot but sub-Saharan Africa enduring either tepid growth or recession as they are hit by a low demand for raw materials.
Once considered a key driver of global growth, developing nations have been battered since the financial crisis, as crucial custom from sputtering Western economies has dried up, while governments struggle with huge debts.
In an update to its World Economic Outlook the IMF said emerging economies had enjoyed “a period of relative calm in recent months” after the global turmoil unleashed at the start of the year by worries over China’s economy.
It also increased its forecast for expansion this year in developing nations, to 4.2 percent from 4.1pc estimated in July, saying they would make up more than three-quarters of projected world growth.
But it also said, “The outlook for these economies is uneven and generally weaker than in the past. While external financing conditions have eased with expectations of lower interest rates in advanced economies, other factors are weighing on activity.”
The Fund said the lower commodity prices had boosted India, where growth hit 7.6 percent last year and a number of structural reforms had been implemented.
However, it warned, further measures were needed to boost jobs, while the central bank should continue with its own reform agenda.
India’s central bank cut interest rates to a six-year low of 6.25pc on October 4 to boost domestic spending and investment.
The IMF tipped growth of 7.6pc this year and next, up from 7.4pc projected in July. –