IMF downgrades global economic growth forecast to 3.5%

Photo: Reuters

The global economy will grow 3.5% in 2015, down from 3.8% due to the slumping oil prices, the International Monetary Fund has said in its update to the October 2014 World Economic Outlook.

The IMF also cut its forecast for the economic growth next year to 3.7% from 4%.

“The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices,” the report says.

The IMF has downgraded projections in major world economies, except for the United States, where economic growth is expected to reach 3.6% and 3.3% in 2015 and 2016, respectively.

The forecast has been lowered to 1.2% and 1.4% in 2015 and 2016 for the 19-nation euro area, for Germany (1.3% and 1.5%), for France (0.9% and 1.3%) and for Italy (0.4% and 0.8%).

The IMF expects the UK economy to grow by 2.7% this year, while it cut its forecast for 2016 to 2.4% Japan is forecast to grow 0.6% in 2015 and 0.8% in 2016, down by 0.2% and 0.1%, respectively.

Russia’s partners in BRICS grouping are expected to be among the “drivers” of the economic growth. China is to see the growth of 6.8% and 6.3% in 2015 and 2016, India — 6.3% and 6.5%, South Africa — 2.1% and 2.5% and Brazil — 0.3% and 1.5%.

The IMF has lowered its projections for China compared with October by 0.3% in 2015 and 0.5% next year. Russia saw the sharpest downwards revision to a contraction of 3% in 2015 and 1% in 2016.