JOHANNESBURG - The International Monetary Fund says weak global economic expansion is expected to persist this year after growth slowed in 2018 amid the escalation of US–China trade tensions, macroeconomic stress in Argentina and Turkey and disruptions to the auto sector in Germany, among other factors.
In its latest World Economic Outlook, the IMF projected a slowdown for 70 percent of the world economy in 2019. It projected global growth would ease further to 3.3 percent from 3.6 percent last year.
Financial tightening alongside the normalization of monetary policy in the larger advanced economies contributed to significantly weakened global expansion in 2018, especially in the second half, the Fund said.
"This is a delicate moment for the global economy. If the downside risks do not materialize and the policy support put in place is effective, global growth should rebound," it said in its report.
"If, however, any of the major risks materialize, then the expected recoveries in stressed economies, export-dependent economies, and highly-indebted economies may be derailed. In that case, policymakers will need to adjust."
It said this may require synchronized but country-specific fiscal stimulus across economies, complemented by accommodative monetary policy, adding that adequate resources for multilateral institutions were essential to retain an effective safety net which would help stabilise the global economy.
The report said weakness was expected to persist into the first half of 2019 but growth was projected to pick up in the second half of the year, supported by significant monetary policy accommodation by major economies in the absence of inflationary pressures.
With improved prospects for the second half of 2019, global growth in 2020 was projected to return to 3.6 percent, the IMF said.