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IMF – Adjusting to Lower Commodity Prices

World Economic Outlook October 2015 Adjusting to Lower Commodity Prices – “Six years after the world economy emerged from its broadest and deepest postwar recession, a return to robust and synchronized global expansion remains elusive. The revised forecasts in this latest World Economic Outlook report underscore the challenges all countries face. Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth rates marginally, but nearly across the board. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago. Near-term economic growth still looks stronger in advanced economies, compared with the recent past, but weaker in the emerging market and developing economies that account for a growing share of world output and will still account for the lion’s share of world growth. Within advanced economies, receding legacies of recent crises, coupled with protracted monetary policy support and a return to fiscal neutrality, have underpinned generally accelerating output and falling unemployment, although deflationary pressures remain. Recovery is most advanced in the United States and the United Kingdom, where monetary policy looks likely to tighten soon, but is more tentative in the euro area and Japan. In countries outside of the advanced economies, the sources of slower growth are diverse, ranging from commodity price declines (which are also affecting a few advanced economies adversely), to overhangs from past rapid credit growth, to political turmoil. Of course, countries with multiple diagnoses are faring worst, in some cases also facing higher inflation. For emerging market and developing economies as a whole, our forecast is that 2015 will mark the fifth consecutive year of declining growth…”

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