IMF Slashes World Growth Outlook To Weakest In A Decade

Following Christine Lagarde's warnings last week, The IMF has officially cut its outlook for global growth to the lowest since the financial crisis amid a worsening outlook in most major advanced economies and signs that higher tariffs are weighing on trade.

“Following a broad-based upswing in cyclical growth that lasted nearly two years, the global economic expansion decelerated in the second half of 2018,” the International Monetary Fund says in its latest World Economic Outlook.

“Activity softened amid an increase in trade tensions and tariff hikes between the United States and China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies”

In its latest World Economic Outlook, the IMF forecasts that the world economy will grow 3.3% this year, down from the 3.5% the IMF had forecast for 2019 in January:

This is the third time the IMF has downgraded its outlook in six months.

IMF says risks skewed to downside, citing trade tensions, softness in Europe, no-deal Brexit

  • IMF lowers 2019 U.S. growth estimate to 2.3% vs 2.5% estimate in January

  • IMF cuts euro-area growth forecast to 1.3% this year from 1.6%

  • IMF lowers 2019 trade volume growth est. to 3.4% vs 4% in January

Every single country's growth outlook was cut... except Nigeria!

Perhaps of most note is the fact that the IMF raises China 2019 economic growth forecast by 0.1 percentage point to 6.3% but then cuts its outlook for China in 2020 back to just 6.1% (catching down to consensus at 6.0%)...

Of course, it would not be a globalist report without some hope and the fund suggests global economic growth will recover in the second half of this year, before plateauing at 3.6% from next year

However, the IMF is warning that risks are skewed to the downside, with a range of threats menacing the global economy, including the possible collapse of negotiations between the U.S. and China to end their trade war, and the departure of Britain from the European Union without a transition agreement, known as the “no-deal” Brexit scenario.

“Amid waning global growth momentum and limited policy space to combat downturns, avoiding policy missteps that could harm economic activity needs to be the main priority,” the IMF said.

IMF Managing Director Christine Lagarde warned the world economy faces a “delicate moment” as finance ministers and central bankers prepare to gather in the U.S. capital this week for the spring meetings of the IMF and World Bank.