IMF forecasts a slower world growth for the next year 2008 with recent turbulence in financial markets triggered by the fallout from the U.S. subprime mortgage market clouding prospects. The report summarize as follows:
* World growth to slow in 2008, but still expected to remain solid at 4%
* U.S. economy expected to remain weak next year with growth of 1.9%
* Major emerging markets to have taken over as leading contributors to global growth
China's economy gained further momentum, growing by 11.5 percent. India also continued to grow strongly at more than 9 percent. Russia grew by almost 8 percent. These three countries had accounted for one-half of global growth over the past year.
The IMF expects a healthy growth to continue in 2008 (see table above), with emerging market economies continuing to serve as the main growth engine of the world economy (see the chart below). Source: IMF reports.
According to the latest forecast, global growth would slow from 5.2 percent in 2007 to 4.8 percent in 2008, down from the 5.4 percent rate registered in 2006.
Meanwhile, oil prices are at all time highs and upward price spikes remain a concern. The oil market remains tight as demand growth continues, particularly from fast growing emerging markets as well as due to robust U.S. oil demand.
IMF marked down growth across most of Western Europe, in large part because of the combination of the more uncertain financial conditions and the likehood of slower global demand growth with a particular impact also from the recent appreciation of the euro.
Persistent large global imbalances raise two principal concerns:
(1) The possibility of a disorderly depreciation of the U.S. dollar that could have severe repercussions throughout global financial markets.
(2) Sustained large trade imbalances could prompt rising protectionist pressures.
We know that the global economy has faced a significant test in the recent months. So, while growth in the coming months will be affected by the aftermath of the financial turbulance, at this stage it does not appear the impact will be dramatic.
For more, read the World Economic Outlook dated Oct 2007 released by IMF.
According to the latest forecast, global growth would slow from 5.2 percent in 2007 to 4.8 percent in 2008, down from the 5.4 percent rate registered in 2006.
Meanwhile, oil prices are at all time highs and upward price spikes remain a concern. The oil market remains tight as demand growth continues, particularly from fast growing emerging markets as well as due to robust U.S. oil demand.
IMF marked down growth across most of Western Europe, in large part because of the combination of the more uncertain financial conditions and the likehood of slower global demand growth with a particular impact also from the recent appreciation of the euro.
In the emerging markets, economies are expected to continue to expand strongly, although growth is expected to slow from the heady pace of the past two years. As far as Chinese economy, it will grow by around 10 percent in 2008 due to IMF forecasts. And growth will also remain buoyant in other emerging markets.
Persistent large global imbalances raise two principal concerns:
(1) The possibility of a disorderly depreciation of the U.S. dollar that could have severe repercussions throughout global financial markets.
(2) Sustained large trade imbalances could prompt rising protectionist pressures.
We know that the global economy has faced a significant test in the recent months. So, while growth in the coming months will be affected by the aftermath of the financial turbulance, at this stage it does not appear the impact will be dramatic.
For more, read the World Economic Outlook dated Oct 2007 released by IMF.
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