WASHINGTON – Low interest rates and easing trade tensions are likely to boost the global economy over the next two years and help foster steady if modest growth.
That is the view of the International Monetary Fund, which forecasts that world economic growth will accelerate from 2.9% last year to 3.3% in 2020 and 3.4% in 2021. The economy is getting a significant boost – up 0.5 percentage points last year and this year – from central banks’ low interest rate policies, the lender said in a report. global outlook on Monday. For example, the US Federal Reserve cut interest rates three times last year and is expected to keep rates low for the foreseeable future.
And an interim trade deal signed last week between the United States and China – the world’s two largest economies – is expected to add 0.2 percentage points to global growth this year by ways to reduce tariffs and improve business confidence. The global economy is recovering from some temporary setbacks, including a lull in the launch of new technology products and new emissions standards that have disrupted car production.
However, the IMF warned that the global economy continues to face a series of risks, including the possibility that trade tensions will escalate again. And many countries have not benefited from modest growth rates.
Even in the United States, the IMF forecasts growth will slow from 2.3% in 2019 to 2% this year and 1.7% in 2021, partly due to a boost to the economy received from the United States. President Donald Trump’s 2017 tax cuts are fading.
According to the report, economic growth in Canada is forecast at 1.8% in 2020 and 2021, unchanged from the forecast made in October.
The IMF predicts that China’s economy will continue to decelerate – from 6.1% last year to 6% in 2020 and 5.8% next year. While the Chinese economy is likely to benefit from a truce with the United States, Beijing continues to navigate a difficult transition from rapid economic growth driven by investments. often squandering and borrowing money into slower but more stable growth built on spending by the country’s growing middle class.
Likewise, Japan’s economic growth, driven by a struggling aging workforce, is expected to decelerate from 1% last year to 0.7% this year to 0.5% next year. .
Collective growth in the 19 countries that use the euro is expected to gradually pick up: 1.2% in 2019, 1.3% in 2020 and 1.4% in 2021.
The IMF’s global forecast is slightly more bleak than the previous forecast it issued in October, mainly due to a sharp slowdown expected in India: The world’s seventh-largest economy is expected is expected to grow 5.8% this year, down from the IMF’s 7%. expected in October and 6.5% in 2021, down from the previous forecast of 7.4%. In addition, problems in the financial sector have reduced credit, limiting consumer spending in India.
Paul Wiseman, Associated Press
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