International Monetary Fund lowers global economic growth forecast

- The International Monetary Fund(IMF) reduced its projected global growth number for next year from 4 percent in July to 3.8 percent now. The downgrade resulted from continued economic weakness in the Eurozone and a slowdown in several emerging markets.

The 3.8 percent growth rate is still better than the estimated 3.3 percent growth estimated for this year.The IMF claimed there is a one in three chance that the Eurozone could actually enter a recession. Growth forecasts were reduced for the three largest European economies, Germany, France and Italy. Italy will be entering its third year in recession. Lower growth rates are also predicted for Japan, Russia, and Brazil. Brazil is expected to grow only 1.4 percent next year down from the 2.0 percent predicted in July. However, there are signs of strengthening in the world's largest economy the United States and gains as well in Canada and Mexico.
 After a slow growth rate in the first part of 2014 the IMF upgraded US growth prospects to 2.2 percent for 2014. Job growth numbers have been strong and the unemployment rate has dropped to 5.9 percent. 248,000 jobs were added in September. Canada is predicted to grow by 2.3 per cent this year and 2.4 percent in 2015.
 IMF economic growth forecasts have tended to be overly optimistic. In the last four years they have repeatedly been forced to downgrade their growth forecasts.The IMF Managing Director Christine Lagarde warned that the recovery was "brittle, uneven and beset by risks". The IMF report also suggested that the global economy might never return to the high growth rates prior to the financial crisis. Details of the IMF predictions and graphs can be found at this Guardian article..
 While China's growth is predicted to be 7.4 percent this year, by sometime in 2016 it is expected to be down to 6.5 percent. While many countries would envy such growth rates, they are well down from the over ten percent average yearly growth rate before the financial crisis.
 Russia's growth rate will be hit by sanctions imposed by the US and EU. The ruble's value has plunged as investment dries up and capital flees. The IMF predictions assume that the geopolitical tensions in such places as Iraq and the Ukraine will be less. The report noted that "the projected pickup in growth may again fail to materialize or fall short of expectations" and stress that there were increasing downside risks. The downside risks included high levels of public and private debt in many countries.