WASHINGTON: The International Monetary Fund (IMF) predicted on Thursday that the global economy would grow 3.6 per cent next year, the fastest since 2011.

The IMF report “Developments, Outlook and Risks” points out that this positive development was particularly noticeable because it follows a sluggish global growth in recent years and a modest but uneven expansion in 2015.

The report describes, however, the current economic environment as increasingly uncertain and notes that three significant transitions weigh on the global outlook: expected policy adjustments by the US Federal Reserve and further easing in major currency areas; a historic, multi- year rebalancing of China’s growth model; and the end of a decade-long commodity super cycle.

The report also notes that international migration has become a pressing economic issue for both sending and receiving countries, particularly in light of the ongoing refugee crisis.

The number of refugees increased by 40pc to 14.4 million between 2011 and 2014. Around one-third of global refugees in 2014 — mostly from Afghanistan, Iraq and Syria — resided in Lebanon, Pakistan and Turkey.

The IMF projection of a 3.6pc growth next year is contingent on a confluence of favourable factors, with major advanced economies continuing to benefit from supportive monetary conditions and lower commodity prices.

After five years of decline, emerging market economies would also pick up next year, as growth in distressed economies is less negative.

“However, growth remains fragile and could be derailed if transitions are not successfully navigated,” the IMF warns.

The report notes that in an environment of declining commodity prices, reduced capital flows to emerging markets and higher financial market volatility, downside risks to the outlook remain elevated, particularly for emerging economies. Moreover, after repeated markdowns of potential output performance in recent years, medium-term risks of stagnation and of protracted sub-par global growth still remain.

In advanced economies, growth is projected to increase modestly this and next year.

Published in Dawn, November 13th, 2015

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