WASHINGTON: The International Monetary Fund said Tuesday that the global economy faces wide-ranging threats from weak growth and rising protectionism, warning of possible “severe” damage should Britain quit the European Union.
The Fund cut its global forecast for the third straight quarter, saying economic activity has been “too slow for too long,” and stressed the need for immediate action by the world’s economic powers to shore up growth.
It said intensifying financial and political risks around the world, from volatile financial markets to the Syria conflict to global warming, had left the economy “increasingly fragile” and vulnerable to recession.
The IMF raised concerns over “fraying” unity in the European Union under pressure from the migration crisis and the “Brexit” possibility.
And it pointed to the contractions in large emerging market economies, most notably Brazil, where the economic downturn has been accompanied by deep political crisis that has President Dilma Rousseff facing impeachment.
Seeing a broad fall in trade and investment, the IMF cut its forecast for world growth this year to a sluggish 3.2 percent, 0.2 percentage points down from its January outlook and down from the 3.8 percent pace expected last July.
That reflects a glummer view of growth in both developed and emerging economies, with the forecasts for Japan and oil-dependent Russia and Nigeria all sharply lowered.
Growth expectations for most leading economies were pared back by 0.2 percentage points. The outlook for the United States — hit by the impact of the strong dollar — was trimmed to 2.4 percent this year, from 2.6 percent in January.
Only the pictures in China and developing eastern Europe were better. But at a slightly upgraded pace of 6.5 percent growth, China was still on track for a significant slowdown from last year.
