IMF cuts 2016 global growth outlook to 3.4% from 3.6%

FXStreet (Mumbai) - In its latest World Economic Outlook report published on Tuesday, the Washington-based International Monetary Fund (IMF) slashed global growth forecasts from to 3.4% from 3.6% on China headwinds.

Key Headlines:

IMF cuts 2016 U.S. growth forecast to 2.6 pct from 2.8 pct

Brazil, Russia to remain in recession in 2016

Brazil, Russia and Saudi Arabia have been badly affected by the falling oil price

European growth is expected to be 1.7% in 2016, an upward revision of 0.1 percentage points on October, with no change to the 1.7% predicted for 2017

The UK growth forecasts of 2.2% in 2016 and 2017 – unchanged

Downside risks include faster China slowdown, further Dollar appreciation, higher risk aversion

After the release of their latest report, IMF’s chief
economist Maurice Obstfeld noted:

U.S. FED rate hike was based on forecast of strong U.S. growth, inflation rising

Incoming data suggests U.S. recovery weaker than Fed forecast

Bank of England will not be in a rush to raise rates without strong evidence of tightening labour market

Markets are reacting strongly to small bits of evidence

Falling oil prices help consumers and is not an unmitigated negative

IMF doesn't see some of the extreme downside scenarios that the markets seem to be factoring in