World Economic Outlook, October 2016: Subdued Demand: Symptoms and Remedies
World Economic Outlook, October 4, 2016
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Bibliographic details
- Published: October 4, 2016
- Series: World Economic Outlook
- DOI: https://doi.org/10.5089/9781513599540.081
Global growth outlook
- Global growth is projected to slow to 3.1 percent in 2016 before recovering to 3.4 percent in 2017.
- The forecast was revised down by 0.1 percentage point for 2016 and 2017 relative to April’s report.
- The downward revision reflects a more subdued outlook for advanced economies following the June U.K. vote in favor of leaving the European Union (Brexit) and weaker-than-expected growth in the United States.
Financial conditions and monetary policy
- Developments have put further downward pressure on global interest rates, as monetary policy is now expected to remain accommodative for longer.
- Although the market reaction to the Brexit shock was described as reassuringly orderly, the ultimate impact remains very unclear because the fate of institutional and trade arrangements between the United Kingdom and the European Union is uncertain.
- Financial market sentiment toward emerging market economies has improved with:
- Expectations of lower interest rates in advanced economies,
- Reduced concern about China’s near-term prospects following policy support to growth,
- Some firming of commodity prices.
Regional and country-level prospects
- Prospects differ sharply across countries and regions:
- Emerging Asia in general and India in particular are showing robust growth.
- Sub-Saharan Africa is experiencing a sharp slowdown.
- Several emerging market and developing economies still face daunting policy challenges in adjusting to weaker commodity prices.
Risks, political economy, and policy implications
- In advanced economies, a subdued outlook subject to sizable uncertainty and downside risks may fuel further political discontent, with anti-integration policy platforms gaining more traction.
- The report emphasizes that these worrisome prospects make the need for a broad-based policy response to raise growth and manage vulnerabilities more urgent than ever.
International Monetary Fund. World Economic Outlook, October 2016: Subdued Demand: Symptoms and Remedies.