IMF: global recovery remains weak

IMF chief Christine Lagarde warned that governments had failed to deal with longstanding issues.

The IMF warned that the global recovery is sluggish and still vulnerable to economic shocks. IMF chief Christine Lagarde said the recovery was mediocre because governments had failed to deal with longstanding issues.

According to the latest edition of its World Economic Outlook, oil-producing nations and some emerging economies will see weaker growth in 2015. The IMF forecasts global growth of 3.5% in 2015 and 3.8% in 2016 but expects Brazil, Russia and India to contract. China's growth forecasts were unchanged with growth slowing to 6.8%. UK forecasts were unchanged at 2.7%, while the eurozone should grow at 1.5%.

What the commentators said

China also gets "kid-glove treatment". Most City analysts think Beijing's figures, on which the IMF's are based, are "fiction" and that instead of a decline from 6.8% in 2015 to 6.3% in 2016, growth will halve. The IMF is unconcerned about Greece and China and "skates over" major concerns, like the huge hike in global borrowings. It should acknowledge these risks.

Indeed, its forecasts owe more to "the rose-tinted" forecasts of member states" than any serious analysis, said Jeremy Warner in The Daily Telegraph.It "dodges" all the issues the UK faces. Successive governments have failed to solve our problem of poor productivity.

In the UK output per man hour lags other developed nations "by a country mile", while overdependence on consumption fuels debt and makes our companies lazily over-reliant on domestic demand. At 5.6% of GDP, Britain's current-account deficit is "perilously close" to the level at which other European countries collapsed and its position is held together with "sticking plaster".

Britain's recovery "isn't as solid" as it looks, agreed Sheila Lawlor in The Wall Street Journal. Despite Tory boasts about the UK outperforming France, France's deficit is smaller while Germany paid its off this year.

What's more, productivity is far higher in France and Germany than in Britain. French workers produce 27% more than UK workers for each hour worked, while Germans produce 28% more and "even Spain does better".

The problem is that most of the new jobs created in the UK are "low-skilled and low-paying", with 20% requiring only primary-level education. But without far-reaching education reforms, our low-productivity economy is "here to stay".

Recommended

Inflation looks likely to take off this year – but there’s one key risk
Inflation

Inflation looks likely to take off this year – but there’s one key risk

With the world’s governments spending money hand over fist, inflation looks certain to take off at some point. But China could change all that. John S…
19 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
It's not just the UK – we're seeing pandemic housing booms across the globe
Property

It's not just the UK – we're seeing pandemic housing booms across the globe

Soaring house prices aren’t just a UK thing, they’re a worldwide phenomenon. And it’s no coincidence – the underlying cause is much the same. John Ste…
18 Jan 2021
A beginner’s guide to inflation – everything you need tko know
Inflation

A beginner’s guide to inflation – everything you need tko know

One of the most frequently mentioned topics in the news these days is inflation. But what exactly is inflation and how does it affect the economy and …
18 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Prepare for the end of the epic bubble in US stocks
US stockmarkets

Prepare for the end of the epic bubble in US stocks

US stocks are as expensive as they’ve ever been. How can you prepare your portfolio for a bubble bursting?
18 Jan 2021
The best investment trusts to buy for 2021
Investment trusts

The best investment trusts to buy for 2021

Sectors ranging from emerging markets to student accommodation look poised to do well this year, says David Stevenson, as he picks the best investment…
19 Jan 2021