The IMF, at its Annual Meeting in Davos, elected to cut its forecast of global economic growth, with a warning that recent expansion is losing momentum.
The International Monetary Fund (IMF) has elected to revise its World Economic Outlook downward, citing concerns that the recent global expansion is now losing momentum.
The latest revision, announced this week, forecasts an overall 3.5 percent worldwide growth rate for 2019, a 0.2 percentage point decline from the October 2018 forecast. The forecast for 2020 was also revised downward to 3.6 percent, a 0.1 percentage point decline.
Speaking at the World Economic Forum’s Annual Meeting being held in Davos Switzerland this week,
“Overall, the cyclical forces that propelled growth may be weakening faster than we thought,” warned Gita Gopinath, Chief Economist at the IMF. Further noted was that the decline of advanced economies is taking place more rapidly that previously forecasted. The forecast for advanced economies now stands at 2 percent for 2019 and 1.7 percent for 2020. Similarly, the emerging economies category reflects growth of 4.5 percent this year from an actual 4.6 percent in 2018.
Industry supply chain executives and global product sourcing teams should pay special attention to the IMF’s current view of “flashpoints” that could lead to lower growth trajectories in the coming months. They include a “no-deal” Brexit for the United Kingdom and a deeper economic slowdown in China. As Supply Chain Matters has noted in previous prior commentaries, industry supply chain teams are already taking very active risk mitigation efforts in preparing for a possible hard Brexit. Regarding the former, the IMF noted: “The Brexit cliffhanger weighs on the outlook. A no-deal Brexit is one of the major risks to our forecast.” Regarding the latter: “China’s growth slowdown could be faster than expected, and this can trigger abrupt sell-offs in financial and commodity markets.”
China announced today that official economic growth was 6.6 percent in 2018, the lowest rate in 28 years.
While both of the above stated flashpoint areas, as well as others, is on the radar scope of industry supply chains, the IMF acknowledgement at Davos has important meaning for global financial institutions and the investment community.
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