Connect with us

Hi, what are you looking for?

NewsTimes.co.uk

MONEY

IMF warns of hit to UK economic growth

_91515740_gettyimages-516190292

The International Monetary Fund has cut its forecast for UK economic growth next year as it warned that the global recovery remains “weak and precarious”.

Although the IMF raised its prediction for UK GDP growth this year to 1.8%, the figure for 2017 was cut to 1.1%.

Its assumptions are based on “smooth post-Brexit negotiations and a limited increase in economic barriers”.

The IMF’s latest World Economic Outlook predicts “subpar” global growth this year of 3.1%, rising slightly in 2017.

Chief economist Maurice Obstfeld said: “Taken as a whole, the world economy has moved sideways. Without determined policy action to support economic activity over the short and longer terms, sub-par growth at recent levels risks perpetuating itself.”

A fall in US growth this year to 1.6%, down from the previous 2.2% forecast, will be offset by increases in countries including Japan, Germany and Russia and India, the IMF said.
_91515744_hi035621308

The indifferent economic recovery after the global financial crisis has been a persistent theme in the Fund’s regular World Economic Outlook reports.

The latest report warns of the danger of a pattern of underperformance becoming entrenched.

Weak growth can lead to lower investment, slower productivity growth and the erosion of what the IMF calls “human capital” – which means skills and expertise.

Advertisement. Scroll to continue reading.

‘Fraying consensus’

The UK referendum result highlights wider trends in developed economies, the IMF says.

“The Brexit vote and the ongoing US presidential election campaign have highlighted a fraying consensus about the benefits of cross-border economic integration,” the report says.

The US reference is about the hostility to international trade agreements such as NAFTA, which involves the US, Canada and Mexico,) voiced in the election campaign.

The Republican candidate Donald Trump has been the most vocal, though not the only voice expressing such views.

It is a political trend that has the IMF worried. It argues that an environment hostile to trade would make it harder for commodity exporters and poorer countries to develop new lines of exports. Such a trend would also undermine productivity growth and the spread of knowledge and technology.

Mr Obstfeld says: “It is vitally important to defend the prospects for increasing trade integration. Turning back the clock on trade can only deepen and prolong the world economy’s current doldrums.”

_87420540_030727643-1

In one important area – China – the IMF’s concerns have eased somewhat in the short term. Growth has been stable, allaying fears that China’s widely reported economic slowdown would be much more abrupt than it has been.

However, there is a warning about the country’s longer-term prospects and the debt burden faced by many businesses.

“A still-rising credit-to-GDP ratio and lack of decisive progress in addressing corporate debt and governance concerns in state-owned enterprises raise the risk of a disruptive adjustment,” the IMF says.

Advertisement. Scroll to continue reading.

That could have important international implications especially for commodity and machinery exporters, for which China is a vital market.

 

Source: bbc.com

You May Also Like

UK NEWS

Professing to be the lead in Thai relationship with over 1.5 million enrolled single people, Cupid Media’s ThaiCupid brings the one in every of...

FOOD TIPS

In food, if there is one thing you can say without fear of contradiction, it is this: Britain loves burgers. The UK market is...

UK NEWS

Read more about switzerland women here. Swiss ladies and men are not reknown for being the most chatty, outgoing or spontaneous when meeting strangers...

WORLD NEWS

An exclusive article form Orestis Karipis In the 1930’s and 1940’s acid was the weapon of deceived husbands and wives in the Western world...

Copyright © 2020 NewsTimes.co.uk All Rights Reserved