IMF: Legacy of the crisis still weighs on world economy – Business Journal – Portugal

The International Monetary Fund (IMF) maintains the same forecast for economic growth in 2015 (3.5%), but expect less downside risks. The financial crisis and the euro crisis are still brakes recovery.

The World Economic Outlook (WEO), published today, April 14, the IMF anticipates that the world grow 3.5% in 2015, due to an acceleration in the advanced economies of 1.8% to 2.4% between 2014 and 2015. On the other hand, activity in emerging nations will cool from 4.6% to 4 3% in the same period. These are exactly the same estimates that the Fund had presented three months ago.

“Many complex forces are shaping the outlook [economic] around the world,” said Olivier Blanchard (pictured), chief economist IMF. “The legacy of the financial crisis and the Eurozone crisis – weak banks and high levels of public debt, companies and families – still weighs on the [consumer] spending and growth in some countries low growth makes, on the other hand. the slower deleveraging process. “

As already emphasized in WEO chapters published earlier, Blanchard notes that we must face in the coming decades a slower growth period due to less dynamic productivity ., aging and lower investment

In addition, two factors are contributing to a global divide between winners and losers: oil prices and exchange rates. “Great movements in relative prices, exchange rates is the price of oil, creates winners and losers,” adds Blanchard.

The IMF remains committed to accelerating the advanced economies this year compared to 2014, driven by expectation of the United States grow above 3%. In the Eurozone, after a weaker second and third quarter, growth “is showing signs of recovering, supported by lower oil prices, lower interest rates and weaker euro.”

In economies emerging, the IMF scenario anticipates slower growth. While in Europe the cheapest fuels are good news for developing countries – many of them crude exporters – that means less revenue. Latin America and Brazil in particular still suffer from the drop in price of other raw materials, dry, tighter monetary policy and lower confidence of the private sector.

In addition to these factors, there is the consider the geopolitical tensions (Russia – Ukraine). and China’s desire to control credit growth in the country and can halt the progress of the real estate investment

Still, emerging economies are expected to grow 4.3% and . 4.7% in 2014 and 2015, respectively

deflation and recession further

With regard to risks, the IMF identifies a positive: the economy may be more benefit than expected for cheaper oil. On the negative side, there are more factors to consider. The Fund says that the recession and deflation are now further away, but that the financial and geopolitical risks have increased

The main risks identified by the IMF are: the appreciation of the dollar can cause financial stress in emerging markets;. concern with disruptive movements in asset prices in financial markets; geopolitical tensions in Ukraine, Middle East and West Africa that can infect the global economy; and stagnation and low inflation in the advanced economies that, despite the recent improvement, may also jeopardize the recovery.