Emerging world will be caught into the tranquility of the developed countries: warns IMF

The IMF has cautioned that there is no escape for the emerging countries from the ongoing recession emitted by the advanced bloc. Trends show that in the immediate future, the growth trend of the developing and advanced countries will converge.

IMF’s Director General Ms Chrsitine Legarde in a meeting of the monetary economists in Paris told that there is no escape for the vibrant EMEs, but to get into the recession trend in a year or two.  

Ms Legarde reminded that the slowdown of the emerging countries will further dip down growth in the advanced world.  One percent decline of growth in the emerging world will reduce GDP of the advanced countries by 0.2%.

Already, the World Bank and the Fund have forecasts for a worse year in 2016 as many developing countries have to experience the difficulties of 2008.

Slowing growth and financial market uncertainties in the historically resilient Chinese economy is pushing international institutions to downgrade economic performances of the emerging world for 2016.

On the Chinese economic performance, the IMF Director has observed that the new normal of slow growth is good in the long term. But in the short term, it may bring down trade besides adversely affecting commodity prices and triggering financial turmoil.

Commodity prices which are already low will remain in that range for a long term according to the Ms Legarde.