I.M.F. Warns of Uneven Economic Growth
2015/4/17 9:55:13 Source：The New York Times
WASHINGTON — The International Monetary Fund warned on Tuesday that continued weak growth in emerging economies would reduce global growth despite an improving outlook in the United States and Europe.
The fund unveiled its spring economic forecasts as central bankers, finance ministers, academics and financiers from around the world converged here for a week of networking, deal-making and crisis management (in the case of Greece and its continuing debt talks).
The fund highlighted how high levels of debt and fragile banks, in addition to slowing emerging markets, could threaten sustained economic growth.
“A number of complex forces are shaping the prospects around the world,” said Olivier Blanchard, the I.M.F.‘s chief economist. “Legacies of both the financial and the euro area crises — weak banks, and high levels of public, corporate and household debt — are still weighing on spending and growth in some countries. Low growth in turn makes deleveraging a slow process.”
The fund, which for some time has been making the case that the world’s postcrisis recovery remains uneven and fragile, made its most extreme downward growth revisions in large emerging-market economies.
Growth forecasts for Brazil, Russia and Mexico were slashed for 2015, with a mix of uncertain politics, weak commodity prices and volatile exchange rates cited as factors.
Growth for emerging markets is expected to be 4.3 percent next year, which would make it the fifth consecutive year that activity declined compared with the previous year. Some outliers were cited: India is projected to grow at 7.5 percent this year and next, which would put it ahead of China as the fastest-growing of the large emerging markets.
China, once a main driver of global growth, is now expected to grow at 6.8 percent in 2015 and 6.3 percent in 2016, with overheating property markets and questionable loans remaining concerns. Over all, the fund estimates global growth of 3.5 percent this year, increasing to 3.8 percent in 2016.
Emerging-market specialists have argued for some time that these economies are diverging. In one sector are the economies that are making economic reforms and benefiting from investor inflows, as in China, India, Indonesia and the Philippines, they say. Then there are the growth laggards, like Brazil and Russia, which have been hampered by governance problems and commodity downturns, they say.
“Growth is harder to come by these days, and that is why lots of countries now are focusing more on reforms,” said Samy B. Muaddi, an emerging markets bond manager at T. Rowe Price. The fund also upgraded its economic forecast for the eurozone, projecting growth of 1.6 percent in 2015. Economists cited the renewed sense of optimism surrounding theEuropean Central Bank’s commitment to buy government bonds as a means to stimulate economic activity. The relatively positive outlook for Europe contrasts with the fund’s comments on Europe last fall when it took Germany to task for not doing more to jump-start a recovery in Europe.
Now there are strong signs of increased bank lending and economic activity in Germany, Spain and even Italy, where the policies of the new prime minister, Matteo Renzi, are having a positive effect.
With the United States set to grow at 3.1 percent this year and next, the fund said that the large developed economies would need to assume a dominant role in driving global growth. Low interest rates and lower oil prices would help, economists said.
The fund said that the dollar’s recent strong run could add half a percent to global growth, with the stimulative effect of weaker currencies in Japan and Europe prevailing over reduced exports in the United States.
Still, as equity markets hit new highs, lifted by a wave of large-scale corporate deal making, more economists are coming around to the view that the American economy is strong enough to absorb an expected increase in interest rates this year by the Federal Reserve.
“The U.S. economy is in very good shape,” said Rick Rieder, a senior bond executive at the asset management giant BlackRock, citing the 250,000 jobs the economy has created in some months.
Whether Greece can strike a deal with its creditors before running out of money will be a major topic of discussion this week. Many of the main players — including the Greek and German finance ministers, Mario Draghi of the European Central Bank, and Jeroen Dijsselbloem, who represents European creditors — will be in town this week.
The fund expects Greece to grow at a rate of 2.5 percent this year, a figure most economists see as wildly off the mark. The view now is that it will be lucky to grow at 1 percent this year, as deposits continue to leak from its banks in the face of fears of a messy exit from the eurozone.
The two leaders in the Greek debt situation will get a chance to present their cases publicly on Thursday, when Yanis Varoufakis, the Greek finance minister, and his German counterpart, Wolfgang Schäuble, are scheduled to speak, separately, at the Brookings Institution.
