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".