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International Monetary Fund (IMF): Weaker Global Economic Recovery & US Growth Rate at 2.1% in 2020

18 Oct 2019

According to a recent announcement of the International Monetary Fund (IMF), which between others aims to promote global economic growth and financial stability, the following year's recovery concerning the global economy will be marginally weaker than expected, and US growth will remain slow.

IMF cut its global growth forecast for 2020 by 0.1% points to 3.4%. The increasing trade as well as the geopolitical pressures had placed economies in a "precarious" position. IMF is estimated growth of 3% this year, the lowest rate since the global financial crisis.

In the October World Economic Outlook (WEO), IMF mention that: "As policy priorities go, undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions top the list". Also, it said: "Such actions can significantly boost confidence, rejuvenate investment, halt the slide in trade and manufacturing, and raise world growth”.

The IMF currently expects that in one year from now the American economy should grow by 2.1%. From the previous forecast, a 0.2% - point improvement is significantly weaker than the 4% rate that President Donald Trump guaranteed before his presidency. The rate remains slower than the US growth of 2.4% which the IMF expects in 2019.

However, improvement stimulus from an ongoing two-year government federal budget deal as well as the Federal Reserve's rate cuts would balance the "fading effects" of prior tax reductions. The overall impact according to the IMF is that ambiguity over trade policy would hamper US development.

IMF Managing Director, Kristalina Georgieva top priority is to prepare for a slowdown in the global economy and to make sure that the IMF provides support to the countries that are considered to be vulnerable towards the changing global economic conditions.

According to the IMF, the slight global recovery expected in 2020 won't be "broad based". Most of the stronger development will originate from troubled developing markets like Turkey, Argentina and Iran.

Step by step ways to prod development are:

• The end of the trade war between the United States and China would be one approach to help development. Discussions between the world's two biggest economies proceeded a week ago. However, a thorough arrangement stays slippery

• The International Monetary Fund said that with levies on several billions of dollars’ worth of goods staying set up, governments need to accomplish more to help development where conceivable and not depend on central bank improvement

• Part of the world’s most dominant central banks have pushed interest rates into negative area in order to prod growth. A month ago, the ECB pushed its benchmark rate further underneath zero, to short 0.5%.

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