IMF Cuts Global Forecasts

The International Monetary Fund (IMF) is less cheery these days about global growth, warning that the outlook remains sluggish and there are no clear signs of a turning point.

The Washington-based institution forecast in October a global growth rate of 3% for 2019 and of 3.4% for 2020. The IMF has now revised down October's forecasts to 2.9% and the full-year forecast down to 3.3%. The downward revision was mostly due to lower growth in India. For 2021, the Fund has forecast a growth rate of 3.4%.

The Fund noted that some of the biggest economic uncertainties, highlighted in October, have dissipated.

The U.S. signed a "phase-one" trade deal with China last week. Though the deal has kept some of the existing trade tariffs, it was interpreted as a truce by markets in the heated dispute that started back in 2018. Meanwhile in the U.K., lawmakers have approved an agreement that outlines how the country will leave the European Union, scheduled for January 31. The approval allows the U.K. to avoid an abrupt breakup from the European Union later this month and gives more certainty to business and citizens on both sides of the English Channel, at least until the end of 2020.

In addition, the IMF has said that central banks are expected to keep supporting their respective economies. "Monetary policy has continued to support growth and buoyant financial conditions. With these developments, there are now tentative signs that global growth may be stabilizing, though at subdued levels," said the IMF in the report.