The International Monetary Fund (IMF) has lowered its expectations for the global economy, according to the agency’s latest World Economic Outlook report.
Worldwide economic output is anticipated to be 3.3% this year, 0.4 percentage point below the IMF’s April forecast. For 2015, the IMF’s growth estimates were lowered to 3.8%.
“Downside risks have increased since the spring,” the IMF said in the report released at its annual meeting in Washington. “Overall, the pace of recovery is becoming more country specific.”
While the U.S. and U.K. have seen decent growth so far this year, it isn’t enough to pull along the remaining nations that have struggled to recover from the Great Recession.
“This is a very slow recovery and a very uneven recovery,” Oliver Blanchard, chief economist with the IMF, told CNBC.
Despite the slowdown, global economies are recovering. We’re “not running, but maybe walking on our four legs,” said Blanchard. “We’re very optimistic that the recovery will continue for some time.”
Growth in the U.S. and UK is expected to continue ticking along with economic expansion rates of 2.2% and 3.2%, respectively. The U.S. growth was upgraded 0.5 percentage points after its strong second-quarter gross domestic product report of 4.6%. That helped make up for the slow first quarter that took many economists and leaders by surprise.
Europe continues to record anemic growth, and that was compounded by lower-than-expected numbers out of Germany this week. The European nation’s factory activity dropped by the most since 2009. Industrial output fell 4% and factory orders were down 5.7% in August, driven down by weak eurozone and China demand as well as trade disruptions with Russia.
Europe is expected to be an ongoing drag on output. Expectations for Germany, France and Italy were all downgraded. The 18-nation Eurozone will expand 0.8% this year, 0.3 percentage points lower than the IMF’s July estimates.
Looking east, Asia remains a growth engine despite the domestic slowdown in demand, the IMF said. Growth is forecast to remain at 5.5% this year, largely helped along by China’s expected 7.4% expansion, one of the highest worldwide.
