The world economy will be up by just 3.5% in 2015, and by 3.7% in 2016, according to the latest estimate from the International Monetary Fund (IMF). Both estimates are lower by 0.3 percentage points from the IMF’s previous forecast, made in October.
One bright spot was the United States: The IMF revised its estimate for U.S. economic growth to 3.6% this year, up half a percentage point from the October forecast.
In the wake of the world financial crisis, trillions of dollars have been pumped into the global economy in the form of cheap central bank cash, boosting stocks, bonds and real estate prices.
Yet growth is limited. Even radically lower oil prices will have limited impact on stimulating the overall economy.
Russia is expected to be among the hardest hit nations, with the IMF forecasting a 3% contraction this year, followed by another 1% in 2016. Both figures are severely lower than the October evaluation.
China, the world’s second-largest economy, will continue to slowdown, with growth at around 6.8% this year and 6.3% next year.
The International Monetary Fund said growth could be stronger than forecasted if lower oil prices deliver a greater lift than expected. However, global growth could take a hit if volatility spikes in the emerging markets.