Conservative Party politician Tom Pursglove, UKIP leader Nigel Farage, Conservative Party politician Peter Bone and former Labour Party politician Nigel Griffiths poses for photographs ahead of Grassroots Out. The IMF noted rising nationalist tendencies in a number of countries.
WASHINGTON (MarketWatch) — The International Monetary Fund on Tuesday again lowered its estimate for global growth, citing volatility in financial markets, slowing momentum in developed economies and continued difficulty for emerging-market nations, as it also highlighted a growing backlash against trade and global ties.
The IMF cut its estimate for global growth to 3.2% this year and 3.5% next year. That represents a downgrade of 0.2% for 2016 and another tenth for 2017 from what it forecast in January, and a cut of 0.4% in 2016 and 0.3% in 2017 from what the IMF saw in October.
The IMF’s estimate for the U.S. was cut to 2.4% in 2016, a downgrade of 0.2%, and to 2.5% in 2017, representing another tenth of point off its January forecast.
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That said, the IMF points out that its estimate of 3.2% growth is still better than the 3.1% the globe churned out in 2015. The IMF noted that financial markets have recovered due to improved economic data, a firming of oil prices, lower capital outflows from China and decisions by major central banks.
Besides turmoil in financial markets, the IMF also points out the violent instability in a number of countries, including Syria, that’s driven millions of refugees to surrounding countries.
“It has challenged the European Union’s capacity to preserve open internal borders, and as the incidence of terrorism has increased, the strains have only grown,” said Maurice Obstfeld, chief economist at the IMF. “Coupled with other, economic, pressures, the result in Europe has been a rising tide of inward-looking nationalism.”
That’s not limited to just Europe — in the U.S., he notes, there’s a backlash against cross-border economic integration. Though not mentioned by name, both Donald Trump and Bernie Sanders have been boosted in their presidential campaigns by attacks against global trade.
Several large emerging-market economies are facing deep contractions due to internal political strife or geopolitical pressures, and El Nino-related drought or flooding is hurting a number of low-income countries, he added.