By Tom Burnett, CFA
On January 20, 2020, the IMF revised its October outlook for global GDP growth down somewhat from its earlier projections. The IMF forecast for global growth now sees modest improvements from 2.9% in 2019 to 3.3% in 2020 and 3.4% in 2021. These slight revisions of 0.1 percent for 2020, and 0.2 percent in 2021 are primarily the result of reduced expectations for India and other emerging economies.
In the U. S., the IMF sees reduced growth of 2.0% in 2020 and 1.7% in 2021, compared to 2.3% in 2019. Investors need to watch these forecasts closely since reduced overall economic growth can significantly reduce corporate profits which are the main support for stock market performance. As for China, the projections are 6.0 in 2020 and 5.8% in 2021, compared to 6.1% in 2019. Clearly, the tariffs and trade disputes between the two nations are having a negative impact on the growth possibilities for both countries. The forecasts for Japan are noticeably disappointing with a 2020 estimate of just 0.7% and a 2021 estimate of 0.5%. As the Brexit uncertainty begins to clear up, the estimates for the EU area are slightly positive with the 2020 forecast of 1.3% and the 2021 forecast of 1.4% compared to 1.2% in 2019.
Tom Burnett, CFA is Director of Research