The IMF is projecting growth of 3.1 percent this year, down from 3.4 percent in 2014 and rising to 3.6 next year.
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The 2016 growth would be the fastest since 2010, but each of these forecasts is slightly lower than our previous projection in July.
"The primary reason for this reduction is the shifting trends of the advanced and emerging market countries. Several advanced economies are strengthening, although at a slightly slower rate than we foresaw in July. Their growth should be 2 percent this year and 2.2 percent in 2016," Mitsuhiro Furusawa, Deputy Managing Director, IMF, said.
"Now there is a need for upgraded policies that can take that growth to a higher, more durable level.
"At the same time, you are well aware of the decelerating growth of the emerging markets and, relatedly, the developing countries. This will be the fifth straight year of declining growth for the emerging markets.
"We are projecting 4 percent growth this year for the group, and 4.5 percent in 2016, down from 4.6 percent last year. Again, these are off a bit from our earlier forecast. Some countries have shown greater resilience; some need to take policy steps that can strengthen growth.
"Nonetheless, we cannot lose sight of the fact that emerging markets as a group are still growing quite fast. And as I said, we see this group rebounding next year.
"How to explain the relative weakness worldwide? Weak commodity prices obviously are key, particularly for producers of oil and base metals. That said, we can’t forget that many economies are benefiting from these lower prices. Still, commodities are not the whole story.
"Global industrial production weakened in the first half of the year, consistent with the uneven strength of demand in major economies. World trade also slowed and investment was weak worldwide.
"But there is something else contributing to this weakness. Caution about the risks and uncertainties facing the global economy has itself become a tangible element of the slowdown. Concern about the interest rate environment, about the future of oil prices, about future demand from advanced and emerging economies: all play a part in business decisions.
"Lower expected future growth has in turn dampened demand for investment. This is a point I will return to in a moment.
"First and foremost, we must not lose sight of the fact that Asia—and particularly emerging Asia—remains the fastest-growing region of the global economy. So we must maintain a sense of perspective about current trends.
"The deceleration of growth among the emerging market economies certainly affects this region. But we still see Asia growing at 5.4 percent this year and next. This reflects the region’s relatively strong labor markets and disposable income growth—especially here in Southeast Asia.
"Asia’s performance is impressive if you take into account the renewed slow growth in Japan and, most importantly, China’s continuing deceleration from its era of high-velocity growth.
"China’s slower growth is one of the most important transitions influencing the world economy: from export-led growth to a model increasingly driven by domestic consumption and services, and less debt-financed public investment. This is an essential transition to create an inclusive, market-driven economy that produces safer and more sustainable growth.
"For all the market concerns about China’s prospects, growth in that country remains robust by any standard except its own over the past generation: we project 6.8 percent this year and 6.3 percent in 2016." ■
An upper level high pressure system is expected to continue aiding well above average and potentially dangerous temperatures throughout the West into the first full weekend of September.