Following their recent advice to the Federal Reserve not to raise interest rates until next year, the International Monetary Fund (IMF) has now revised down its global economic growth forecast for 2015 because of doubts over the strength of the U.S. economy. First quarter results for the U.S. showed an “unexpected output contraction,” according to the IMF, of 0.2%; therefore, the IMF has now cut its global forecast from 3.5% down to 3.3%. Last month, the IMF revised their U.S. economic forecast, predicting growth at 2.5%, down from their previous 3.1%.
The problems within China and Greece have had only a marginal effect, they say, upon the global forecast – in fact, both Chinese and European forecasts are actually unchanged. Olivier Blanchard, the IMF’s Research Department director, reports that the Chinese stock market “bubble has burst” and the forecast for the country is unchanged at 6.8%. In addition, the state of Greece’s economy and their possible “Grexit” (removal from the euro) has not changed the IMF’s forecast for Europe as a whole; that remains at 1.5%.
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