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IMF forecasts global growth of 3.3%

The International Monetary Fund projects global economic growth in 2020 to be 3.3%, accelerating to 3.4% in 2021.

These values confirm the trend of 2019, in which the Fund saw an expansion in economic activity of around 2.9%.

However, these numbers constitute a downward revision of the latest estimates, published in October last year, with values having been cut by 0.1% and 0.2%, for 2020 and 21, respectively.

This is the result of the slowdown in emerging economies, especially India, which had to update its growth projections, given the economic performance of the last two years.

On the other hand, the perception of global risk has decreased due to the evolution of the Brexit process and a probable agreement with the European Union, as well as trade negotiations between the United States and China.

The main alerts launched in World Economic Outlook January 2020 are related to the increase in geopolitical tensions, mainly between the USA and Iran, and the phenomena of social protest that have occurred in several countries.

The ability of governments to resolve these sources of instability could change the global growth projection for 2020. Therefore, the IMF recommends that States increase their public expenditure, adopting measures that reduce inequalities and increase social cohesion, which reinforce the multilateral cooperation and adopt policies that strengthen economic activity.

Global Growth Prospects

For this year, the global recovery can be expected to be driven by a return to growth in commercial activity, albeit still moderately. According to the Fund’s most recent report, this phenomenon is a reflection of increased domestic demand and private investment.

  • For large economies, forecast growth will be 1.6% in 2020.
  • For the United States, growth of 2.3% is expected in 2019 and 2% for 2020, which could decrease to 1.7% in 2021. These values result from the expected softening of financial conditions and a fiscal plan that should be reviewed.
  • For the Eurozone, the IMF predicts growth of 1.3% for 2020, which represents a percentage increase of 0.1%, compared to growth in 2019. And for 2021, growth is projected to be 1.4%.
  • The United Kingdom expects growth of around 1.4% in 2020 and 1.5% in 2021, keeping the October projection of the World Economic Outlook unchanged.
  • Japan’s growth rate is projected at 0.7% for 2020, following the review of some tax reforms and also the increase in consumption. In addition, there are other factors to take into account, such as increased investments. And for 2021, a decrease to 0.5% is expected, due to the reduced impact of the fiscal stimulus.
  • For developing economies, growth of 4.4% is projected for 2020 and 4.6% for 2021. These projections result from the slowdown in emerging economies, especially China and India.
  • The growth estimate for Asia is 5.8% for 2020 and 5.9% for 2021.
  • China will see its growth slow down, as a result of trade tensions with the United States, which has imposed tariffs on several export products, and internal structural factors. The Chinese economy is expected to expand by around 6% in 2020 and 5.8% in 2021, while India’s economy is expected to grow by 6.5%.
  • As for Latin America, growth of 1.6% is projected in 2020 and 2.3% for 2021. These projections have been revised downwards since the last report, as a result of recent forecasts for Mexico and Chile.
  • In the Middle East and Central Asia, expected growth for 2020 is 2.8%, while for 2021 it is 3.2%.
  • For Sub-Saharan Africa, growth of 3.5% is projected in 2020-21, also revised downwards due to investor distrust, deterioration of public finances in some markets and political uncertainties.