The World Economy Is Slowing Even As India's Provides Hope

The International Monetary Fund (IMF) provides an assessment of the global economy twice every year. The multilateral lender has recently released the new edition of its flagship World Economic Outlook. It makes for sober reading.

The estimates for the five years to 2028 show that economic momentum is slowing in most countries. India is a rare exception. Roshan Kishore has already pointed out in the Hindustan Times that if the forecasts published in the report stand the test of time, then India would be the fastest-growing large economy in 11 of the 15 years starting 2014.

The first chart shows the loss of global momentum. The horizontal axis shows the anticipated growth rate in a particular year based on the IMF forecast made five years earlier. So, the peak forecast for 2013 was made in 2008, before the North Atlantic financial crisis. The IMF says that the forecast for global growth for 2028 is the lowest made for any year since 1990.

All forecasts are prone to errors. However, the IMF says that its forecasting models have in fact been optimistic, which means that actual global growth has mostly been lower than what was expected by its economists five years earlier. Consensus forecasts by economists in the private sector have generally followed the same trend. The upshot: the gradual slowdown in the global economy since the financial crisis is unlikely to be reversed in this decade.