The IMF Downgraded Its Global Growth Forecast Once Again in January

In World Economic Outlook published in January, the IMF revised its forecast downward for the world GDP for 2019 and 2020 from 3.7% to 3.5% and from 3.7% to 3.6% respectively.

Key sources of risk are:

· the outcome of trade negotiations between the USA and China – the existing tariffs for Chinese imports end on March 1 and may rise again;

· the state of financial markets following various factors and the possible non-deal Brexit;

· the decrease in the global demand.

The revision was mainly for the euro area – 0.3 percentage point lower (down to 1.6%) in 2019 and remained unchanged in 2020 with 1.7%. The rates for Germany are 0.6 percentage point lower (down to 1.3%) with no changes in 2020 (1.6%). The rates are also down for Italy – 0.4 percentage points lower (down to 0.6%).

For developing economies, the forecast was reduced by 0.2 percentage points for the current year (down to 4.5%); by 0.1 percentage point (down to 4.9%) for the next year. The growth forecast declined by 0.2 percentage point (down to 1.6%) in 2019 and by 0.1 percentage point (down to 1.7%) in 2020. At the same time, the average crude oil prices are projected at $60 per barrel in 2019 and 2020 instead of $69 and $66 respectively.

The projections for China stay at the level of 6.2% in both years. The IMF pointed to the risk of deeper slowdown in China’s economy. Beijing published China’s growth rates for Q4, 2018, which made 6.4% over 6.5% in July – September. The rate declined from 6.6% to 6.8% year-over-year in 2017. Unless the USA and China resolve the differences, China’s economy might add more risk to financial markets, warns the IMF.

Elena Sazonchik, Marketing Director, TELS Group of Companies: “The IMF has been revising the global growth forecasts downward since July 2018. For us, these figures signal that the logistics operators should expect the decrease in demand for their services as country’s economic indicators, the volume of industrial investments and consumer buying power have always been the major factor influencing the logistics market. As we can see, these indicators are steadily declining both across the world and in the Russian Federation.”

Sources: Kommersant newspaper, IMF