The International Monetary Fund on Monday (20.01.2020) forecast revised global economic growth of 3,3% in 2020 and 3,4% in 2021, but in Latin America growth is projected to recover from an estimated 0,1% in 2019 to 1,6% in 2020 and 2,3% in 2021. The figures released in a report represent a downward revision of 0,1 percentage points for 2019 and 2020, and of 0,2 for 2021, compared to the outlook presented in October.
In the case of Latin America, he says, report, revisions are due to several factors, including a Mexico's growth outlook for 2020-21 has been cut and Chile's growth forecast has been significantly revised downwards, due to the social tensions of recent months.
However, he points out that Brazil will grow in 2020 and attributes this to an improvement in attitude following the approval of the pension reform and the dissipation of supply disruptions in the mining sector.
The release of the IMF report coincides with the start of the World Economic Forum, which is being held in Davos, Switzerland, from January 20 to 24, and which will feature the participation of several world leaders.
According to the report, the global downward revision is mainly due to “unexpected negative performance of economic activity in a few emerging market economies,” in particular India.
Report Update #WEOThere are signs of stabilization, but global growth is still slow. New estimates put growth at 2,9% in 2019, 3,3% in 2020 and 3,4% in 2021. What does this mean for the global economy? #WEO #WEF20 https://t.co/fgAKxamqEa pic.twitter.com/6cuYVsw5Yh
- IMF (@FMInoticias) January 20, 2020
However, he says that there has been a stimulus in the markets “due to indications that manufacturing activity” and International trade reflects “intermittently favorable” news on trade negotiations between the United States and China, and fewer fears of a no-deal Brexit.
The International Monetary Fund recommends stronger multilateral cooperation and the adoption of national policies that provide timely support to facilitate a sustained recovery that benefits all.
He notes that “closer cross-border cooperation is needed on multiple fronts. Countries should promptly address discontent over the rules-based trading system, promptly resolve the deadlock in the World Trade Organization’s Appellate Body, and resolve disagreements without raising tariff and non-tariff barriers.”.
It also notes that "technological tensions between countries are unlikely to be resolved unless the parties cooperate to restrict cyberattacks and resolve outstanding issues related to intellectual property rights and technology transfer. If conflicts in trade and technology are not resolved, confidence will be further undermined and investment will weaken.
The organization indicates that "countries have to urgently cooperate to reduce greenhouse gas emissions and limit the rise in global temperature."
He notes that “across all economies, a key imperative – and one that is increasingly relevant in a period of rising discontent – is to broaden inclusiveness, ensuring that social safety nets are in place to protect the most vulnerable and that governance structures reinforce social cohesion.”
In emerging economies “that are experiencing macroeconomic difficulties related to internal imbalances,” the IMF recommends “necessary policy adjustments to restore confidence and lay the foundations for a return to stable and sustainable growth.”
This implies, the report adds, the crucial need to “ensure that adequate safety nets exist to protect the vulnerable within the prevailing constraints.”
Heavily indebted economies should generally seek consolidation—pacing it to avoid a drastic slowdown in activity—by better targeting subsidies, broadening the revenue base, and ensuring better compliance.
“A common overall objective is to achieve more inclusive growth through spending on health and education to enhance human capital, while at the same time encouraging the entry of companies that generate high value-added jobs and productively employ broader segments of the population,” the IMF report concludes.
Global growth is still sluggish, but there are signs that it may be reaching a turning point. What factors are holding back the economy and what are the signs of stabilization? Read the report update #WEO #WEF20 https://t.co/zPu5bpY9Bx pic.twitter.com/z7FBf54hEO
- IMF (@FMInoticias) January 20, 2020
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