IMF Cuts 2016 Global Growth Forecast to 3.2%

IMF Cuts 2016 Global Growth Forecast to 3.2%

The International Monetary Fund (IMF) warned of global economy standstill as it cut global outlook for 2016 and 2017.

The fund cut its projected world expansion to 3.2 percent this year, down from 3.4 percent in January. The world economy in 2017 is expected to grow 3.5 percent, down from 3.6 percent projected three months ago.

“Growth has been too slow for too long,” IMF chief economist Maurice Obstfeld said in remarks prepared for a press briefing. “There is no longer much room for error.”

“But by clearly recognizing the risks they jointly face and acting together to prepare for them, national policy makers can boost confidence, support growth, and guard more effectively against the risk of a derailed recovery,” he said.

The fund cited the return of “financial turmoil impairing confidence and demand in a self-confirming negative feedback loop.”

“Another threat is that persistent slow growth has damaging effects that themselves reduce potential output and with it, consumption and investment,” the IMF said. “Consecutive downgrades of future economic prospects carry the risk of a world economy that reaches stalling speed and falls into widespread secular stagnation.”