IMF`s Global Economic Outlook Article Analysis

IMF’sGlobal Economic Outlook Article Analysis

IMF’sGlobal Economic Outlook Article Analysis

Thetopic “IMF Downgrades Global Economic Outlook Again”, updated onOctober 6th2015 by Ian Talley, talks about economic forecast. The article’stopic focuses on International Monetary Fund’s lowering of itsforecast on the global economy for the next two years. A slowdown,according to Talley (2015), of the emerging markets is dragging theworld’s economy towards its weakest economic expansion since globalfinancial crisis.

Thereis a warning of a high risk of recession globally, with the articlelooking at it from a downgrade position in its global growth outlook. The topic also shades light on one of the economic powerhouses,China, on their declaration and subsequent plummeting in the pricesof commodity, which from Merino’s (2010), revealed an emergingworld that borrowed excessively, overinvested, and exhausted itsability without having a major overhauls in economy.

Theauthor’s main argument revolves around deflation concerns. Theauthor, Ian Talley, gives the Eurozone to be the case in point. TheIMF is now expected with a growth of 3.5% annually as compared toestimated 3.8% made in earlier September, 2015. Ian Talley arguesthat the 2016 growth forecast has to be cut to 3.7%. The author’sargument about the downgrade in regard to the forecasts, comes inspite of the global boost in the world’s economy and sharp fall infuel prices, could be positive in the majority of countries. The oneargued most is on the IMF’s position in offsetting most of theeconomic negative factors lined along with notable weaker investment.

Thatin turn, according to Talley (2015), reflects on the diminishedexpectations that concern the growth prospects for most of theemerging and developed economies over the next decade. Ian Talley,the author of the article, argues that if any business look forwardto weaker growth, then there would less opportunities to buy and sellgoods and services, which means less amounts of incentives to invest.However, the author acknowledged that there was a high possibilitythat deflation may set off debt crisis one more time in the Eurozone.

Ananalysis of the article put emphasis more on the slowdown in globaleconomy, which is one of the factors that revise the forecasts.Looking at the article, there is a high likelihood that through 2015,the global economic growth will remain sub-par. Spilsbury (2012)observed that some economic strengthening in growth, which isexpected to rise in 2016, would be realized but future doubtscontinue to build concerning future economic potential in growth.Additionally, developing countries currently face tough challenges,which include a looming prospect as a result of high borrowing costs.This is because the world stands in between an era of having keycommodities and low oil prices.

Secondly,the World Bank Group’s report, according to Merino (2010), whichwas released in May 2015, reveals that most of the developingcountries are not likely to grow and surpass 4.4% in this fiscalyear. This brings out the essence of the article that 3rdworld countries would be an engine of the world’s growth as aresult of the financial crisis. In addition, there would be a need tofund the developing countries to ensure they become more resilient.This would help these countries into becoming more resilient inmanaging the transition securely.

Inconclusion, it is also highly likely that countries apart from theeconomic powerhouses, the United States, Russia, and China, wheninvested in, more so in education, health, people, businessenvironment, infrastructure, and creation of jobs, will in the endemerge to be stronger. With exceptions such as the United States andChina, patterns of downbeat forecasts now focuses on the overalleconomic growth at 3.7% this fiscal and 3.4% the following year,2016.

References

Merino,N. (2010). Theworld economy.Farmington Hills, MI: Greenhaven Press.

Spilsbury,R. (2012). Globaleconomy.Chicago, Ill: Heinemann Library.

Talley,I. (2015). IMF Downgrades Global Economic Outlook Again. TheWall Street Journal. Retrievedfromhttp://www.wsj.com/articles/imf-downgrades-global-economic-outlook-again-1444140016