The International Monetary Fund cut its global economic growth forecast for 2016 on Tuesday as it expects a number of factors to weigh on world economies. Global growth for this year is seen at 3.4 percent, up from a 3.1 percent forecast for 2015, but 0.2 percent lower than previously forecast, the IMF’s World Economic Outlook report said. The IMF said “pickup in global activity is projected to be more gradual than in the October 2015 World Economic Outlook, especially in emerging market and developing economies.”
“Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy,” according to the report. The organization cited slower growth in emerging markets, especially in China, falling commodity prices, and rising interest rates in the U.S. as potential risks to global growth.
Weak Chinese manufacturing data — coupled with plunging commodity prices — have sent equity markets around the world into flux. “Overall growth in China is evolving broadly as envisaged, but with a faster-than-expected slowdown in imports and exports, in part reflecting weaker investment and manufacturing activity,” the IMF said. “These developments, together with market concerns about the future performance of the Chinese economy, are having spillovers to other economies through trade channels and weaker commodity prices, as well as through diminishing confidence and increasing volatility in financial markets.”