The prospects for global growth have been downgraded by the International Monetary Fund (IMF) after China’s sluggish economy slowed down to its lowest rate since 1990. The news comes despite a rapid decline in the price of oil that had given many economies cause for optimism.
China’s 24-year low in GDP growth was seen as not as bad as it could have been
Announcing its revision of global growth, the IMF said it expected that instead of the 3.8 percent rise that it had expected for 2015 last October, the world economy would now likely grow by just 3.5 percent. Part of the reason for this is thought to lie with a weakening of investment by governments and the private sector, as well as a slowdown of the already low growth experienced in the Eurozone.
The projections come as global leaders meet at the annual World Economic Forum in Davos to discuss the major issues facing the world economy. Top of the agenda will be the Eurozone and whether the European Central Bank’s chief, Mario Draghi, will soon start a round of quantitative easing. Also on the agenda will be the Ukraine’s discussion with the IMF over more financial aid, which it hopes will amount to around $15bn.
China’s 24-year low in GDP growth was seen as not as bad as it could have been, but it is a consequence of the country’s scaling back of its heavy investment of recent years and its efforts to rebalance its economy. 7.4 percent growth last year in China was higher than the predicted 7.2 percent, but analysts still believe the country is set for further declines, with the IMF suggesting that 2016 could see a fall to 6.3 percent in GDP growth.