IMF says global economic growth will remain subdued

The International Monetary Fund (IMF) predicted on Tuesday that subdued global economic growth will persist and warned that the consistent stagnation could fuel populist calls on trade and immigration.

In its latest World Economic Outlook, the IMF said that economic growth will remain weak this year following the United States and Britain’s vote to leave the European Union.

A drop in the U.S economic growth due to a “disappointing” first-half performance that was caused by weak business investments and a diminish of stockpiles of goods may strengthen emerging markets such as Japan, Russia, Germany, and India.

Emerging markets and developing economies will see a 0.1 percent point gain in growth to 4.2 percent.

Global economic growth in 2016 is being forecast at a 3.1 percent and having a small increase of 3.4 percent in 2017.

“Taken as a whole, the world economy has moved sideways,” said IMF chief economist and economic counsellor, Maurice Obstfeld. “We have slightly marked down 2016 growth prospects for advanced economies while marking up those in the rest of the world,” he said.

To support growth in the near future, the IMF says that banks in advanced economies should maintain easy monetary policies. However, a monetary policy alone won’t restore the strength that economies need.

Governments should focus on spending more on education, technology, and infrastructure to help expand productive capacity, according to the IMF report.

“By using monetary, fiscal, and structural policies in concert—within countries, consistent over time, and across countries—the whole can be greater than the sum of its parts,” Obstfeld concluded.

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