The IMF released its World Economic Outlook (WEO) overnight and in the 249 pages of the report the 14 words that stand out are:
A likely scenario for the global economy is one of continued, plausible disappointments everywhere.
Which of course is a big risk for the Australian economy given our reliance on mining at present with the economy trying to transition to more domestically focused growth.
The IMF expects global growth of just 2.9% this year, down from 3.2% last year, before a recovery to 3.6% in 2014 coming from advanced economies growth as emerging growth lags.
IMF chief economist Olivier Blanchard didn’t gild the lily when he said the outlook is a combination of good news and bad news with private demand recovering in advanced economies. In many emerging markets, growth is lower than expected and declined much more than expected.
Tellingly, he said there appeared to be a “slowdown in potential growth” in the emerging world.
The IMF highlighted the impact of the Chinese slowdown from a 10% growth rate over the past decade to an expected 7.5% over the next 10 years noting that:
Countries that appear vulnerable by this metric include Australia, Brazil, Chile, and Indonesia.
Looking directly at Australian growth, the IMF is forecasting 2.5% for 2013 and 2.8% for 2013, which is not out of market compared to current forecast, but relatively subdued.
You can find the full report here.
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