Emerging markets and developing economics including India, Latin America and Mexico all had growth revised down, as did Saudi Arabia where the recent OPEC deal has cut back oil production and civil strife increases pressure on the economy.
One of the major risks to global markets would be, the IMF said, a move to protectionist policies around the world which would “hurt productivity and incomes and take an immediate toll on market sentiment”.
The IMF added: “In those advanced economies where balance sheets remain impaired, an extended shortfall in private demand and inadequate progress on reforms (including bank balance sheet repair) could lead to permanently lower growth and inflation, with negative implications for debt dynamics.”
Reflecting the uncertainty caused by the election of Donald Trump to the US presidency, the IMF conclude the growth outlook by saying it was not all doom and gloom, as policy stimulus in the US and China could result in stronger economic activity, with higher investment to be expected if confidence in the recovery strengthens.
