The International Monetary Fund has released an update to its latest World Economic Outlook forecasts, with signs of a slowdown in the second half of 2018 leading to downward revisions for several economies. Growth patterns for 2019 and 2020 reflect a persistent decline in the growth rate of advanced economies from above-trend levels—occurring more rapidly than previously anticipated—together with a temporary decline in the growth rate for emerging market and developing economies in 2019, as well as the impact of trade actions on China and other Asian economies.

Government action

With momentum past its peak, the IMF notes that policymakers need to act now to reverse headwinds to growth and prepare for the next downturn, advising all advanced economies to emphasise measures that boost productivity, raise labour force participation, particularly of women and, in some cases, youth, and ensure adequate social insurance, including for those vulnerable to structural transformation. Fiscal policy should build buffers where needed to replenish limited policy space for combating downturns.

(Source: Release | WEO Update | IMF Blog)

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