Home news IMF Corrects Growth Forecast Down Again | TIME ONLINE

IMF Corrects Growth Forecast Down Again | TIME ONLINE

The economy in Germany will be in the current year, according to estimates of the International Monetary Fund (IMF) are expected to grow only 0.8 percent. In the coming year, however, things are set to go up again, almost reaching the pace of 2018 (1.5 percent) with growth of 1.4 percent. "The decline in Germany has something to do with the automotive sector," said IMF chief economist Gita Gopinath, pointing to problems with the new consumption and emissions standard WLTP.

Worldwide, economic growth in the current year will be only 3.3 percent, after 3.6 percent in the previous year, said the IMF. This is the slowest growth since 2009, when economic output shrank as a result of the financial crisis. However, next year's growth should resume the pace of 2018, said Gopinath. That was not sure.

Whether the forecast will arrive depends, among other things, on developments in countries such as Argentina and Turkey. And on the question of whether the trade dispute between China and the United States, the world's two largest economies, can finally be solved. "We very much hope that an agreement will be reached soon," said Gopinath. The trade war also has an effect on developing countries, such as oil-rich Nigeria, because of pressure on mineral resources.

Weaker growth in the US

Fortunately, inflationary pressures are not too great, Gopinath said. If need be, central banks could ease monetary policy somewhat, as has happened with major central banks, such as the US, Japan and England.

The IMF had to reduce its forecast, which had been revised downwards in January, once again. Part of the problem is in the US. According to the IMF, the stimulating effects of the tax reform of President Donald Trump have already fizzled there.

The largest economy in the world will grow by 2.3 percent in 2019 and only 1.9 percent in the election year of 2020 – far from Trump's forecasts, which in part had promised growth of well over four percent. China, which is involved in an intense trade dispute with the US, is also weakened. It drops from 6.6 percent in 2018 to 6.3 percent in the current year and 6.1 percent next year.

The fear of a disorderly Brexit contributes significantly to the problem. According to an IMF scenario, Britain would lose 3.5 percent of its economic output by 2021, and the loss to the EU would be 0.5 percent. "The situation is on the move, predictions are very difficult," said Gopinath.

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