Global growth downgraded
Once again, global growth is disappointing. For the fourth year in a row, the optimism felt at the start of the year has proven to be misplaced. The title of the International Monetary Fund’s (IMF’s) January report was a hopeful “Is the tide rising?” The title for the latest October report is more circumspect, “Legacies, clouds and uncertainties”. The IMF’s updated forecasts are for global growth to average 3.3% in 2014, rising to 3.8% in 2015. This is slightly lower than the IMF’s forecasts in July and 0.4% lower than the January forecast. The only major economy to see its growth forecasts upgraded significantly was the US. The world’s largest economy is expected to grow by 2.2% this year and 3.1% next year. The forecast for the Eurozone and Japan has been cut for both 2014 and 2015 to around 1% per year. The IMF attaches a 40% probability to a triple-dip recession in the Eurozone, a concern amplified by the release of weak German industrial production numbers for August on Monday. China’s growth outlook remains the same at 7.4%.