WASHINGTON (AP) - The International Monetary Fund is downgrading its forecast for global economic growth and says falling commodity prices and jumpy financial markets have raised global risks.
WASHINGTON (AP) — The International Monetary Fund is downgrading its forecast for global economic growth and says falling commodity prices and jumpy financial markets have raised global risks.
In a report Tuesday in advance of the IMF-World Bank annual meetings this week in Lima, Peru, the fund says the world economy will grow 3.1 percent this year, down from a July forecast of 3.3 percent and slowest since the recession year 2009.
"Downside risks to the world economy appear more pronounced than they did just a few months ago," the fund said in its World Economic Outlook.
The fund predicts the United States will grow 2.6 percent this year, up from a July forecast of 2.5 percent.
Emerging market economies will likely grow 4 percent, which would mark the fifth straight annual drop. They have been hurt by an economic slowdown in China, which has reduced demand for emerging market raw materials and pushed down prices of commodities such as copper and oil.
Among those hardest hit by the commodities bust: The Brazilian economy, forecast to contract by 3 percent this year; and Russia, forecast to shrink 3.8 percent because of lower oil prices and economic sanctions imposed by the West as punishment for Russian aggression in Ukraine.
Collapsing energy prices are also hurting Canada. The IMF downgraded its forecast for the Canadian economy by half a percentage point to 1.5 percent this year.
The Chinese economy has been slowing for four straight years, partly because the government is engineering a transition away from dependence on exports and often-inefficient investments. Instead, they are moving toward slower, more sustainable growth based on consumer spending. The IMF expects Chinese economic growth to drop to a 25-year low 6.8 percent this year, but that is unchanged from its July forecast.
The IMF foresees continued improvement in Europe. It kept its forecast for 1.5 percent growth this year in the 19 countries that share the euro currency.
The Japanese economy is expected to grow 0.6 percent this year, down from the IMF's July forecast of 0.8 percent but an improvement from last year when it shrank 0.1 percent.