IMF and WB release gloomy world economy report
Ahead of the spring meetings of the International Monetary Fund (IMF) and World Bank, the IMF has released its latest World Economic Outlook. The news is not good.
The IMF has reduced its forecast for global economic growth this year to 3.3 per cent because of persistently sluggish growth and spending cuts in the US and continued economic and financial crises in the Eurozone, among others.
Evidence of this was the IMF downgrade of growth prospects for the oil-exporting countries of the Middle East and North Africa to 3.25 per cent this year, due to weaker international demand for oil. These countries have been able to use revenue from oil to off-set the worst of the international economic turmoil, but they need to be wary of a drop in the price of crude.
Finance ministers of the Group of 20 economically significant nations, who will also be at the meetings, are likely to discuss how efforts by the developed countries to stimulate their economies are causing upheaval on the currency markets, often to the detriment of emerging countries. However, it is unlikely there will be any meaningful resolution of this conflict, as in difficult times countries prioritise their own interests, even at the cost of the greater good.
In any event, sluggish growth and dangerous volatility on financial markets are the “new normal” — as witnessed by the recent gyrations in gold prices — and there is relatively little that global and national authorities can do to influence events. Economic growth is dependent on — badly damaged — business and consumer confidence, while financial markets are driven by skittish investor sentiment. As often as not, efforts by authorities to intervene in markets have had dangerous unintended consequences.
For now, there is little more global leaders can do besides try to talk up growth prospects — and hope that investors and consumers hear them.