The condition of the global economy remains moderate as the slowdown in the emerging markets along with European and Japanese economies is all time high, the International Monetary Fund informed. The sharp decrease in the crude oil prices internationally is working well for the world economy. Capital market volatility, inadequate investment and geopolitical crises have contributed to this slowdown, according to the IMF.
The crisis lender has predicted that the world economy will have a growth rate of around 3.5 percent this year. The semi-annual report titled World Economic Outlook also points out that the growth rate will be 3.8 percent next year, which was 3.4 percent. The IMF upgraded status for Japan and Europe and downgraded the world’s largest economy, the United States. The rest of the data supported IMF’s January predictions. These developed economies are still recovering from the 2008 financial crisis, according to chief economist Olivier Blanchard from the IMF.
The Europe is also recovering from the Eurozone crisis. The aging population in the developed economies and low investment in future-oriented capacities are killing potential growth engines in these advanced economies. Lower spending and lower growth have triggered the vicious circle of stagnation in the advanced economies.
US growth should lead the world economy in the upcoming two years in terms of growth and industrial output as IMF projected its growth to 3.1 percent in January this year. With China slowing down, and other countries dependent on the Chinese economy are showing low growth prospect, the overall picture of the world economy looks worrisome.