FXStreet (Barcelona) – The IMF lowered their global growth forecasts to a weaker outlook than the previous year, due to large downward revisions to US, Canada and Mexico’s growth, according to Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ.
Key Quotes
“The IMF released their updated economic outlook report yesterday in which they downplayed the downside risks to global growth from recent developments regarding both Greece and China. IMF Chief Economist Blanchard stated that recent developments will have a major negative effect on Greece’s economy but that it hasn’t produced much contagion so far which is reassuring. He also described the sharp sell-off in Chinese equities as “very much a side show” that doesn’t reflect on the economic fundamentals in China. Their forecast for economic growth in the euro-zone and China were left unchanged although both economies were viewed as sources of potential risk.”
“If an agreement is not reached over the weekend we would expect a Greek default and likely Grexit to prompt at least modest downgrades to the outlook for growth in the euro-zone.“
“The IMF’s outlook or global growth was revised modestly lower with growth this year now expected to be weaker than last year which stands in contrast to expectations at the start of the year that lower oil prices would boost global growth.”
“The largest downward revisions to growth were for the US, Canada, and Mexico reflecting in part the weak start to the year for the US economy although the set back is seen as temporary. The IMF is still expecting that growth in the advanced economies will accelerate modestly this year while growth in emerging and developing continues will likely slow for the second consecutive calendar year.”
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