CAIRO: The International Monetary Fund cut its prospect for the global economic growth in 2015 Tuesday, lowering its forecast by 0.3 percent from the previous October outlook.
The IMF stressed the “urgent need for structural reforms in many economies, advanced and emerging market alike,” and called on governments to keep accommodative monetary policies, in order to prevent real interest rates from edging up.
Global growth is projected at 3.5 and 3.7 percent during 2015 and 2014, respectively, the IMF said in its World Economic Outlook (WEO) released Tuesday.
“Global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies,” the IMF said in the statement.
The revisions were driven from “a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices,” added the IMF.
Despite the gloomy outlook of major advanced economies, the United States’ growth projection alone has been raised from 3.1 percent to 3.6 percent in 2015.
Due to OPEC’s decision not to cut oil output last month, world oil prices plunged more than 50 percent. The IMF revised the projections for most emerging economies, cutting the outlook for the oil-rich Saudi Arabia to 2.8 percent and 2.7 percent in 2015 and 2017 respectively, down from a 4.4 percent projected growth for every year in the previous outlook.
“Although some oil exporters, notably members of the Cooperation Council for the Arab States of the Gulf, are expected to use fiscal buffers to avoid steep government spending cuts in 2015, the room for monetary or fiscal policy responses to shore up activity in many other exporters is limited,” said the IMF.
The fund attributed a lower growth forecast for sub-Saharan Africa, Nigeria and South Africa to the drop of oil and commodity prices.