International monetary fund (IMF) in its latest update on World Economic Outlook (WEO) has anticipated global growth at 3.9 % rate in both 2018 and 2019 but the expansion is becoming less even, and risks to the outlook are increasing. Amid rising tensions over international trade, the broad global expansion that began roughly two years ago has plateaued and become less balanced. We continue to project global growth rates of about 3.9 percent for both this year and next, but judge that the risk of worse outcomes has increased, even for the near term. The risk that current trade tensions escalate further is the greatest near-term threat to global growth.
The rate of expansion appears to have peaked in some major economies and growth has become less synchronized. In the United States, near-term momentum is strengthening in line with the April WEO forecast, and the US dollar has appreciated by around 5 % in recent weeks. The forecast for 2018 is lower by 0.1% point compared to the April WEO, largely reflecting greater-than-expected growth moderations in the euro area and Japan after several quarters of above-potential growth.
Growth projections have been revised down for the euro area, Japan, and the United Kingdom, reflecting negative surprises to activity in early 2018. Among emerging market and developing economies, growth prospects are also becoming more uneven, amid rising oil prices, higher yields in the United States, escalating trade tensions, and market pressures on the currencies of some economies with weaker fundamentals. Growth projections have been revised down for Argentina, Brazil, and India, while the outlook for some oil exporters has strengthened.
· As the global cyclical upswing approaches its two-year mark, the pace of expansion in some economies appears to have peaked and growth has become less synchronized across countries.
· Among advanced economies, growth divergences between the United States on one side, and Europe and Japan on the other, are widening.
· Growth is also becoming more uneven among emerging market and developing economies, reflecting the combined influences of rising oil prices, higher yields in the United States, sentiment shifts following escalating trade tensions, and domestic political and policy uncertainty.
· The outlook is also clouded by ongoing trade tensions and waning support for global economic integration in some advanced economies. An escalation of trade tensions could undermine business and financial market sentiment, denting investment and trade. Beyond its immediate toll on market sentiment, the proliferation of trade measures could increase the uncertainty about the potential breadth of trade actions, thus hindering investment, while higher trade barriers would make tradable goods less affordable, disrupt global supply chains, and slow the spread of new technologies, thus lowering productivity.
a) Advanced economies
Advanced economy growth is expected to remain above trend at 2.4% in 2018— similar to 2017—before easing to 2.2% in 2019. The forecast for 2018 is lower by 0.1 percentage point compared to the April WEO, largely reflecting greater-than-expected growth moderations in the euro area and Japan after several quarters of above-potential growth.
· In the United States, growth is projected at 2.9% in 2018 and 2.7% in 2019.
· Growth in the euro area economy is projected to slow gradually from 2.4% in 2017 to 2.2% in 2018 and to 1.9% in 2019.
· The growth forecast for Japan has been marked down to 1.0% for 2018 (0.2 percentage point below the April WEO projection).
b) Emerging and developing economies
The growth of emerging and developing economies overall 2018 and 2019 growth forecasts remain unchanged at 4.9% and 5.1%, respectively. Emerging market and developing economies have experienced powerful crosswinds in recent months: rising oil prices, higher yields in the United States, dollar appreciation, trade tensions, and geopolitical conflict.
· Emerging and Developing Asia is expected to maintain its robust performance, growing at 6.5% in 2018–19. Growth in China is projected to moderate from 6.9% in 2017 to 6.6% in 2018 and 6.4% in 2019.
· India’s growth rate is expected to rise from 6.7% in 2017 to 7.3% in 2018 and 7.5% in 2019, as drags from the currency exchange initiative and the introduction of the goods and services tax fade. The projection is 0.1 and 0.3 percentage point lower for 2018 and 2019, respectively, than in the April WEO, reflecting negative effects of higher oil prices on domestic demand and faster than-anticipated monetary policy tightening due to higher expected inflation.
· Growth in the ASEAN-5 group of economies is expected to stabilize at around 5.3% as domestic demand remains healthy and exports continue to recover.
· In Emerging and Developing Europe, growth is projected to moderate from 5.9% in 2017 to 4.3% in 2018 and further to 3.6% in 2019. Financial conditions have tightened for some economies with large external deficits— notably Turkey, where growth is set to soften from 7.4% in 2017 to 4.2% this year.
· Growth in Latin America is projected to increase modestly from 1.3% in 2017 to 1.6% in 2018, and further to 2.6% in 2019.
· Growth in sub-Saharan Africa is expected to increase from 2.8% in 2017 to 3.4% this year, rising further to 3.8% in 2019. For the Nigerian economy growth is set to increase from 0.8% in 2017 to 2.1 % in 2018 and 2.3 % in 2019.