IMF has cut its global growth outlook due to China, the US dollar and geopolitical tensions

Jessica Morris
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The IMF cited a medley of risks (Source: Getty)

The International Monetary Fund (IMF) has cut its global growth forecast for this year by 0.2 percentage points to 3.4 per cent, citing risks relating to the emerging markets.

It comes amid a medley of risks which includes a sharper-than-expected slowdown in China, the impact of a strong dollar on the US economy and geopolitical tensions in a number of regions.

"This coming year is going to be a year of great challenges and policymakers should be thinking about short-term resilience and the ways they can bolster it, but also about the longer-term growth prospects,” said Maurice Obstfeld, IMF Economic Counsellor and Director of Research.

Advanced economies are expected to grow 2.1 per cent this year and hold steady in 2017, a slightly weaker pickup than than forecast in October.

Emerging market economies are expected to grow 4.3 per cent in 2016, and 4.7 per cent in 2017. However, the IMF said these numbers don't capture the diversity of situations across countries.

"India and parts of emerging Asia are bright spots, projected to grow at a robust pace, whereas Latin America and the Caribbean will again see a contraction in 2016, reflecting the recession in Brazil and economic stress elsewhere in the region, even as most other countries in the region will continue to grow," it said.

"Emerging Europe is expected to grow at a steady pace, albeit with some slowing in 2016, given that Russia could remain in recession in 2016."

"Most countries in sub-Saharan Africa will see a gradual pickup in growth, but only to rates that remain lower than those achieved during the past decade."

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