IMF Slashes Global Growth Outlook Again, Warning "Of Great Challenges" In Year Ahead

Tyler Durden's picture




 

Three months ago, we noted that if there’s anything the IMF is good at, it’s cutting global growth forecasts, something the Fund did for the fourth time in twelve months in October.

Of course the IMF wasn’t alone in adopting an increasingly dour outlook for global growth and trade. The WTO, the ADB, and the OECD all suggested that worldwide commerce was effectively grinding to a halt last year. “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should,” WTO chief economist Robert Koopman remarked, late last summer.

Well, things haven’t gotten any better since then. The downturn in key emerging markets like Brazil and Russia has intensified and China’s hard landing is upon us (remember, even if you believe the NBS’ “official” GDP data, China’s deflator has now been negative in three of the last four quarters which certainly suggests the books are being cooked, so to speak). Meanwhile, there are worrying signs that America’s double-adjusted “recovery” has stalled out altogether as freight volumes fell Y/Y for the first time in three years in November, a month in which Class 8 truck sales collapsed 59% Y/Y and 36% M/M.

And then there is of the course the Baltic Dry which is, well, flatlining, having fallen below 400 last week.

Now, in the latest sign that sluggish global growth and trade have become endemic and structural rather than fleeting and cyclical, the IMF has once again cut its global growth forecasts, citing a year of “great challenges.”

“This coming year is going to be a year of great challenges and policymakers should be thinking about short-term resilience and the ways they can bolster it, but also about the longer-term growth prospects,” Maurice Obstfeld, IMF Economic Counsellor and Director of Research, said in the Fund's latest world economic outlook.

The strong dollar is weighing on the US manufacturing sector, while emerging markets are “now confronting a new reality of lower growth,” the Fund says, adding that “the risks are tilted to the downside.”

What risks, you ask? These risks:

  • A sharper-than-expected slowdown in China, which could bring more international spillovers through trade, commodity prices, and waning confidence.
  • A further appreciation of the dollar and tighter global financing conditions which could raise vulnerabilities in emerging markets, possibly creating adverse effects on corporate balance sheets and raising funding challenges for those with high dollar exposures.
  • A sudden bout of global risk aversion, regardless of the trigger, could lead to sharp further depreciations and possible financial strains in vulnerable emerging market economies.
  • An escalation of ongoing geopolitical tensions in a number of regions, which could affect confidence and disrupt global trade, financial flows, and tourism. New economic or political shocks in countries currently in economic distress which could also derail the projected pickup in activity.
  • Commodity markets pose two-sided risks. On the downside, further declines in commodity prices would worsen the outlook for already-fragile commodity producers, and widening yields on energy sector debt threaten a broader tightening of credit conditions.
    • On the upside, the recent decline in oil prices may provide a stronger boost to demand in oil importers, including through consumers’ possible perception that prices will remain lower for longer.

All in all, there is a lot of uncertainty out there, and I think that contributes to the volatility,” said Obstfeld. “We may be in for a bumpy ride this year, especially in the emerging and developing world."

Yes, we "may", especially considering the fact that all of the "risks" the IMF outlines aren't really "risks" but rather realities. That is, we're already seeing a sharper-than-expected slowdown in China, a soaring dollar, a sudden bout of global risk aversion, and escalating geopolitical tensions. 

In any event, here are the latest projections from the Fund which include a downward revision of 0.2% for both the US and the world, and a sharply lower outlook for depression-stricken Brazil.

And here's a slick infographic the Fund put together for those who aren't inclined to read their reports:

And here's the updated hockey stick graph which depicts the extent to which the Fund has become a serial downward-revisor:

The bottom line is the same as it's been for quite some time: expect these revisions to continue until either the entire world slips into recession, or central bankers learn to print trade.

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Tue, 01/19/2016 - 10:04 | 7065966 Haus-Targaryen
Haus-Targaryen's picture

Of those great challenges, I hope at least some of them result in;
.

1) The collapse of the EMZ

2) The collapse of the EU
3) Germany finding its balls again & closing its border
4) Deporting most of these shitheads  

Tue, 01/19/2016 - 10:07 | 7065971 philipat
philipat's picture

First BIS and now IMF in a CYA exercise. Watch out below!!

Not, of course, that the IMF has ever made a correct forecast about anything so this might be a Gartman.....

Tue, 01/19/2016 - 10:13 | 7065988 philipat
philipat's picture

@HT

Doesn't that all amount to European nations regaining sovereignty from these unelected dickheads in Brussels? The UK referendum might now, I hope, be very interesting. But, of course, in present circumstances, Cameron will now try to delay it for as long as possible. But the writing is on the wall. Except of course for Mutti's NSA file....

Where is Ghordi when you need him? Probably too absorbed in the bureaucratic EU panic?

Tue, 01/19/2016 - 10:15 | 7066006 Dindu Nuffin
Dindu Nuffin's picture

The end goal, is to flood Europeans with lower IQ 3rd world idiots who will end up voting for hyper socialist and even communist governments. 

The white race, is the only one to have expelled the Jews (109 times!).  The white race is ENEMY NUMBER 1.

Tue, 01/19/2016 - 10:18 | 7066019 philipat
philipat's picture

Maybe they should send them to The US instead, thereby increasing the average IQ of both?

Tue, 01/19/2016 - 10:23 | 7066035 new game
new game's picture

sell the fucking rip, STFR..

Tue, 01/19/2016 - 10:24 | 7066039 new game
new game's picture

this fucker goes red by end of trading sesion, imfo...

Tue, 01/19/2016 - 10:26 | 7066051 philipat
philipat's picture

Maybe not. Wall Street still has some "Inventory" to offload? Nothing moves in a straight line forever. Except, seemingly, Gold!!

Tue, 01/19/2016 - 10:31 | 7066065 new game
new game's picture

true dat, as in stocks from 1929 to 1939. ha, but negatives on many fronts. growth via fiat debt is sputtering under the yoke of payments and underlying impaired asset depreciation. classic debt destruction, til the PPT can ride in and save the day with one fucking boatload of MOAR fiat based enslavement debt, ha...

Tue, 01/19/2016 - 10:50 | 7066080 philipat
philipat's picture

The ESF is estimated to have up to $10 TRILLION. Possibly a little less after buying all the UST's being dumped by Sovereigns so as not to upset the interest rate apple cart. But even then, if it runs out, The Fed will just print up some more...Yawn....

Tue, 01/19/2016 - 11:55 | 7066400 glenlloyd
glenlloyd's picture

I'm still at a loss to see exactly what it is that these people do that warrants the existence of the IMF?

Their leader is an orange colored lady with blonde hair that dresses couture but wants us plebes to believe that they care about us...give me a break.

Couldn't we save a pretty big chunck o change if we just eliminated things like the IMF? I mean really, the projections over the years have been about as worthless as anything we've seen. If that's all the better they can do you know they're not employable in the private sector...right?

Tue, 01/19/2016 - 12:35 | 7066628 cheech_wizard
cheech_wizard's picture

>The white race, is the only one to have expelled the Jews (109 times!).

Not that I doubt your data, but do you have a list? Because I feel the need to see which media outlets will ban me for posting said list.

Standard Disclaimer: Thanks in advance, results to follow...

 

Tue, 01/19/2016 - 10:38 | 7066078 Ghordius
Ghordius's picture

philipat, I'm not sure why you called me at all. the UK referendum is exactly about what I always say: that sovereignty... isn't Brussels'

the sovereign members of the EU lend some authority to Brussels. and in Brussels you find the younger daughter of the european parliaments

no continental can force Cameron to fix the date of that referendum, and the Westminster Parliament could vote an out of the EU in a day

meanwhile, I hope the Blessed Island of the Angels finally exits the EU. the EU does not fit England and England does not fit the EU

Tue, 01/19/2016 - 10:48 | 7066086 philipat
philipat's picture

True colors, Ghordi. But the way things are going, the UK referendum might be somewhat academic by the time, if and when, it is held?

I'm impressed by those EU surveillance systems monitoring all internet communications, incidenatlly. I was just testing...

Tue, 01/19/2016 - 10:49 | 7066108 Ghordius
Ghordius's picture

as long as you don't try them out when I do not happen to be browsing the newest articles. it would be... embarassing

but what is your take, philipat? is Cameron willingly leading the UK to a BreXit? as a reminder, it's Obama telling him not to, 'cause the US wants to keep that "gateway to the EU"

Tue, 01/19/2016 - 11:00 | 7066125 philipat
philipat's picture

Following Obuttboy and The US has worked out really well for the EU vassal states hasn't it? IMHO, European nations should re-establish their sovereignty and tell both Brussels AND Washington to shove it. Who needs any of it?

Oh, and stop bombing the shit out of ME countries if you don't want a flood of refugees into Europe (Not the US, although Obuttboy is, unconstitutionally, trying hard to fix that). And cut the stupid sanctions against Russia, which are not in the best interests of Europe. I do find it intriguing that Russia has now assumed the moral high ground..

Tue, 01/19/2016 - 11:08 | 7066160 Ghordius
Ghordius's picture

they don't go away only because you showed them the finger, philipat. speaking of Uncle Sam, Uncle Vlad, Uncle Xi and so on

meanwhile, I vastly prefer us europeans engaged in a Concert for Europe. strike the EU, I will call for a different concert

it's our ministers, i.e. our servants, and I want them forced by law or treaty to meet often, and discuss their silly differences

Cameron, for example, hates that. and it's bad for his party's votes for him to be seen in the EU Council, not so long ago euphemistically called in the British Press a "summit"

I do not care. he has to move his damn ass there and talk and listen, as by treaty, as long as the UK is part of this circus

I am the co-sovereign, philipat. sovereignty starts here, with the Citizen claiming co-sovereignty, and then appointing delegates, representatives, ministers, and so on

and I tell you that what the English truly want is not negotiable or possible: access to all continental markets without any further skin in the game

either compromises or nothing

Tue, 01/19/2016 - 11:27 | 7066201 philipat
philipat's picture

Not that you recognised my position. But, anyway:

"and I tell you that what the English truly want is not negotiable or possible: access to all continental markets without any further skin in the game"

Cameron does seeem to have got himself into a bit of a corner doesn't he? But at least he doesn't yet have the wheels falling of his car on Belgian/French autoroutes? Cameron's game, obviously, is to pretend to negotiate and extract some meaningless concessions (Including perhaps the suspension of Shengen, which is going to happen anyway?) just to create some more smoke and mirrors for the UK electorate. But I fear that might be a little too transparent in the presence of a very well-organised "Out" lobby. Anyway, you have stated you want the UK out anyway, so that should be good news for you?

Incidentally, market access is also know as a "Free Trade Agreement", like that with Switzerland. The balance of trade between The UK and Continental EU is in favor of Continental EU so denying such a treaty would be a little like "Cutting off one's nose to spite the face", wouldn't it? If not, in my personal experience, Mercedes cars aren't of the quality they used to be anyway..

But then, what do I know, I am Indonesian...

Tue, 01/19/2016 - 11:34 | 7066291 philipat
philipat's picture

Incidentally:

"they don't go away only because you showed them the finger,"

Indeed they don't. In fact, that requires true political LEADERSHIP. Not of the type "When it gets tough you have to lie".

Tue, 01/19/2016 - 11:59 | 7066430 Ghordius
Ghordius's picture

+1 and a big LOL. in his case, though, he lacks an army, doesn't he? ;-)

Tue, 01/19/2016 - 11:58 | 7066417 Ghordius
Ghordius's picture

philipat, perhaps I still misunderstand your position

meanwhile, I am not interested in a acrimonious debate in the UK, and I don't see that "out" lobby as really well-organized. have a look at their websites for evidence

note that the Swiss aren't getting a simple "Free Trade Agreement", there are lots of quid-pro-quo in them, including free access to the Swiss labour market for EU citizens

truly, I would not wonder if that referendum passes and get's forgotten very, very quickly

Tue, 01/19/2016 - 17:02 | 7068258 Bazza McKenzie
Bazza McKenzie's picture

+1 for your final para.

Re the "younger daughter of the european parliaments", it's just a shame she turned out to be a whore -- but not surprising.

Tue, 01/19/2016 - 10:19 | 7066023 Silver Bug
Silver Bug's picture

Great challenges ahead to say the least. We are looking an all our collapse. The system is sick and it is broken. A reset needs to and will occur at some point in the future.

 

http://silverliberationarmy.blogspot.ca/2016/01/chris-powell-of-gata-gol...

Tue, 01/19/2016 - 12:16 | 7066519 TheDanimal
TheDanimal's picture

Deport the shitheads to Antarctica! 

Tue, 01/19/2016 - 10:07 | 7065968 Calculus99
Calculus99's picture

An economist interviewing for a job at the IMF/FED/BOE/MFF etc etc

Interviewer: Can you lie, bullshit and make things up to always paint a rosy picture?

Job applicant: Yes. 

Interviewer: Great, when can you start. 

Tue, 01/19/2016 - 10:11 | 7065994 Seasmoke
Seasmoke's picture

Doesn't seem like a strong USD is a good thing for many.

Tue, 01/19/2016 - 10:15 | 7066007 philipat
philipat's picture

Doesn't seem to be working too great for USSA either?

Tue, 01/19/2016 - 10:16 | 7066011 Kina
Kina's picture

I expect massive deflation is in our future...but what happens between now and then might be a bit scary.

Tue, 01/19/2016 - 10:29 | 7066056 two hoots
two hoots's picture

 

The problem with this rebalancing is nobody has a clue what the end results will bring.  It is a new phase in social/economic evolution.

 

Tue, 01/19/2016 - 10:32 | 7066067 NoDebt
NoDebt's picture

I wish something interesting would happen.

Tue, 01/19/2016 - 10:37 | 7066076 Insurrexion
Insurrexion's picture

 

 

BDI down to 363 today.

MSM says markets up on Chinese stimulus hopes? WTF?

This juiced Copper to 1.99.

DAX falling...Euro markets weak...

WTI and Brent falling...

This is what Bullshit smells like.

Tue, 01/19/2016 - 10:51 | 7066115 Mini-Me
Mini-Me's picture

So the IMF thinks there will be positive growth in the US for at least the next two years?  Please.  What are these people smoking?

Tue, 01/19/2016 - 11:03 | 7066151 philipat
philipat's picture

You are obviously not familiar with the IMF "Hockey Stick" approach? They are controlled by Washington so have to diplomatic in their forecasts.....

Tue, 01/19/2016 - 11:59 | 7066429 fowlerja
fowlerja's picture

The world's economy does not have problems...they have challenges...sounds like a politician talking...

Tue, 01/19/2016 - 20:03 | 7069110 whyami
whyami's picture

Wonder which country can cook books as good as the US ever!

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