IMF Slashes Saudi Growth Outlook On Lower Oil Prices, Production

Daniel Fowler
January 22, 2019

"After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising", IMF Managing Director Christine Lagarde told a briefing.

Canada exports many commodities, including oil, so its economy could be hurt by a slowdown in the global economy.

It also lowered the economic growth forecast for next year to 2.2 per cent from the 2.5 per cent it previously predicted.

China announced Monday its GDP had expanded by 6.6 per cent in 2018, down from 2017's 6.9 per cent. Growth in the three months ending in December dipped to 6.4 per cent - the lowest quarterly level since the 2008 global crisis - from the previous quarter's 6.5 per cent.

The commodity-linked Canadian dollar weakened against its USA counterpart on Monday after data showed a slowdown in China's economy and the International Monetary Fund cut its world economic growth forecasts.

The latest International Monetary Fund projections remains unchanged from its previous World Economic Outlook projections.

A survey by auditing and accounting giant PwC of almost 1,400 chief executives found that 29 percent believe global economic growth will decline over the next 12 months, the highest percentage since 2012.

The fund released the report at the annual gathering of economic and financial leaders from around the world and once again urged cooperative action to defuse the risks.

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With growth already weakened by the tariffs imposed on hundreds of billions of dollars in annual trade, mostly between the USA and China, the global economy is more susceptible to additional risks.

The IMF maintained its U.S. growth projections of 2.5 percent this year and 1.8 percent in 2020, pointing to continued strength in domestic demand.

"These potential triggers include a "no-deal" withdrawal of the United Kingdom from the European Union and a greater-than-envisaged slowdown in China".

So far, a fiscal stimulus in China has cushioned the impact of the trade disputes, but the International Monetary Fund insisted the two sides "resolve cooperatively and quickly" their trade disagreement. A slowdown in China, the second-largest economy in the world, and Brexit uncertainty were also listed as risks to its outlook.

"The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilizing an already slowing global economy", it added.

The IMF's growth outlook for the 19 countries that use the euro currency has been reduced to 1.6 per cent from 1.8 per cent.

World Bank President Jim Yong Kim and Microsoft's Indian-origin CEO Satya Nadella will be among the co-chairs of the 2019 edition of this annual congregation of world leaders from January 21-25.

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