In 2019, global growth fell sharply.
Advanced economies in Europe, North America, and Asia, all saw broad-based economic slowing. The slowdown has been even more pronounced in emerging markets and developing economies like Brazil, China, India, Mexico and Russia.
Despite the current economic and geopolitical uncertainties, the IMF is predicting a modest economic rebound in 2020.
The IMF projects that global growth will tick back up to 3.4% from an estimated 2.9% in 2019. The IMF's 2020 outlook is based on projected economic improvements in a number of emerging markets: Latin America, the Middle East and emerging and developing Europe. Global growth is also receiving a significant boost — 0.5 percentage point last year and this year — from central banks’ low-interest-rate policies. The U.S. Federal Reserve, for example, cut interest rates three times last year and expects to keep rates low for the foreseeable future. An interim trade agreement between the United States and China — the world’s two biggest economies — is expected to add 0.2 percentage point to global growth in 2020 by lowering tariffs and improving business confidence.
The IMF, does however, predict an economic slowdown in China and the United States.
"Global growth is sluggish and precarious, but it does not have to be this way, because some of this is self-inflicted," IMF chief economist Gita Gopinath told reporters. "Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent US-China trade truce... and the prospects of a no-deal Brexit have increased." Though China’s economy will likely benefit from the trade truce with the United States, China's economy will continue to decelerate. Beijing continues to manage a difficult transition away from speedy economic growth based on often wasteful and debt-fueled investments to slower but steadier growth built on spending by the country’s growing middle class. Likewise, Japan’s economic growth, hobbled by an aging workforce, is expected to decelerate India: The world’s seventh-biggest economy is expected to grow 5.8% this year, down from the 7% the IMF had expected in October, and 6.5% in 2021, down from a previously forecast 7.4%. In addition, problems in the financial sector have reduced credit, crimping consumer spending in India.
The IMF also cautions investors of a "much more subdued pace of global activity could well materialize." Investors will have to get used to more conservative growth instead of the speedy economic growth they've been used to in the last decade.