The IMF released its latest World Economic Outlook (WEO) in April 2019 with a softening of global growth expected in 2019, at 3.3 percent. The escalation of US-China trade tensions, macroeconomic stress in Argentina and Turkey, tighter credit policies in China, and financial tightening alongside the normalization of monetary policy in the larger advanced economies have all contributed to a significantly weakened global expansion in 2018, which is expected to persist in the first half of 2019.
While 2019 started out on a weak foothold, a pickup is expected in the second half of the year. This pickup is supported by significant policy accommodation by major economies. The US Federal Reserve signaled no increases for the rest of the year whilst the European Central Bank, the Bank of Japan, and the Bank of England have all shifted to a more accommodative stance. China has ramped up its fiscal and monetary stimulus to counter the negative effect of trade tariffs. These policy responses have helped reverse the tightening of financial conditions to varying degrees across countries. With improvements expected in the second half of 2019, global economic growth in 2020 is projected to return to 3.6 percent.
For Mauritius, the IMF predicts a GDP Growth of 3.9 percent in 2019, similar to our own forecasts at the MCCI.
Nonetheless, there are a number of downside risks linked to the ongoing trade tensions between the US and China and the uncertainties surrounding Brexit. Against this backdrop, the IMF is thus urging economies to take actions that boost potential output, improve inclusiveness, and strengthen resilience. Mrs. Gita Gopinath, the new Economic Counsellor of the IMF, further stresses the need for greater multilateral cooperation to resolve trade conflicts, to address climate change and risks from cybersecurity, and to improve the effectiveness of international taxation.