Date: June 2018
Who: IMF – International Monetary Fund
What They Said: The International Monetary Fund issued a stark warning on the future health of the global economy, saying major cracks were now “closer” than it had anticipated and that growth will soon “fade”.
In a highly negative speech, Mitsuhiro Furusawa, deputy managing director of the world’s lender of last resort, said that the outlook for the global economy had worsened.
It was currently enjoying its best run of growth since the 2009 financial crisis, but there were “risks looming on the horizon that could derail this recovery”, Mr Furusawa said.
He added: “Some of these risks are now closer than we had anticipated, injecting new urgency on policy actions to sustain the momentum and resilience of the global economy.”
The official painted an extremely negative picture of the long term future for the global economy.
The economic momentum predicted by the IMF for 2018 and 2019 was temporary, Mr Furusawa said.
The rate of growth would “fade” as the impact of money invested via tax cuts in the United States and via investment in China wears off.
It would also start to weaken “as interest rates rise and financial conditions tighten with monetary policy normalization by major central banks”.
Growth in the EU had been “weaker than expected”. Poorer rates of expansion and “emerging” problems pointed towards a “downward revision” of the IMF’s forecast for 2.3pc GDP growth in Europe.
There was a “rather sobering medium-term outlook” for the EU as ageing populations, an insecure currency union and political uncertainty were all weighing on growth.
Mr Furusawa noted other major “vulnerabilities” which were “building up” and “threatening” wider prosperity.
“Global debt is now 40pc higher than its level in 2007, when it stood at about $116 trillion (£89 trillion). Private debt has been a major driver of this buildup, accounting for up two thirds of total debt,” he said.
Public levels of debt, at a worldwide ratio of 105pc of GDP, were at levels not seen since the Second World War.
There was also a warning sounded about the impact of an emergent trade war between the US and other major economies, including the EU and China.
Mr Furusawa said: “The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth permanently.”
Countries should try to step up economic reforms and build up “buffers” for their financial sectors. However, Mr Furusawa added: “The window of opportunity may be narrowing.”
THPT Comment: OK somewhat sobering thoughts/views…but is that just their job? China, we have heard about…Europe and the rest of the world?
General economy or the hotel world specifically? Hotels are of course directly affected by the general economy, as witnessed in 2008. Not sure why their first graph finish in 2010…what’s the position in 2018?
First Seen: UK’s Daily Telegraph