The IMF, which is the financial arm of the United Nations recently cut down on its predictions on general growth of nations. It also released a study which revealed that several business persons are showing concerns as the wealthiest and most influential individuals in the world converged together in an annual event held.
The survey was released by the IMF the day before the World Economic Forum held in Davos, Switzerland, and it spoke about the issues bureaucrats are tackling in terms of the impending crisis in the world’s economy ranging from the recent US-China trade war to the exit of Britain from the European Union, Brexit. The IMF’s Managing Director, Christine Lagarde, said that;
“After two years of solid expansion, the world economy is growing more slowly than expected, and risks are rising. Does that mean a global recession is around the corner? No. But the risk of a sharper decline in global growth has certainly increased.”
Financial Trouble in Europe
The IMF, in its report, forecast that world economy would grow by 3.5% in the year 2019 and 3.6% in 2020, a number below 0.2 and 0.1 percentage points from what it forecast last year October. This is particularly because of the seeming economic weakness in Europe. Germany, a prominent member of the European Union, will experience not as many gains because of the recent fuel emission standards for cars. Italy will also have its fair share of profit cuts as Rome, the country’s capital has a budget standoff with the EU.
In the report, the financial organization also stated that the economy of the technology giant, China, could also experience slow growth and a UK hard exit from the EU could also prove difficult for the global market. PriceWaterHouse, one of the foremost accounting and auditing powerhouses in the world, held a survey of 1400 chief executives which revealed that 29% are of the opinion that world economic growth will slow down over the next year.
Concerns about the reduced growth in the world economy have shaken markets, and it has forced the Central Bank of the US, the Federal Reserve, to pause its rise in interest rates as investors fidget about signs of a weak Chinese market and the trade war between the world’s biggest trading nations. Data has shown that the Chinese economy recovered in the last quarter of 2018 due to a drop in domestic demand, leading to a period of slow growth for the nation in almost 30 years.
Analysts have also carried out surveys that predict Japan to slide into a recession, which would increase pressure on the country’s Central Bank to maintain its massive stimulus. In the report released by the IMF, Europe is projected to experience slower growth while the U.S. has a constant prediction of 2.5 growth expansion. China’s growth has also been projected at 6.2% for 2019 and 2020. The UK’s economy is projected to grow by 1.5% in 2019, although that projection is liable to volatility.