The UK, meanwhile, is expected to grow by 2.7 per cent in 2015 this forecast is unchanged from October, and remains significantly higher than the European average.
Indeed, the IMF predicts European growth will come in at 1.2 per cent, down 0.2 percentage points from October. However one bright spot in the eurogloom is the Spanish economy, which is now expected to grow by 2 per cent in 2015, up 0.3 percentage points on October’s forecast.
“Economic forecasts of this nature are more like a dowsing rod than a GPS tracking system, but they do confirm what market behaviour suggests- that uncertainty has increased in recent months,” says Laith Khalaf, senior analyst at Hargreaves Lansdown.
“The falling oil price is of course a major source of instability, though as the IMF notes this should be a boost to global economic activity, albeit with winners and losers.”
Indeed, the IMF said that a lower oil price would stimulate more growth in advanced economies, as the benefit feeds more directly through to consumers. In many developing nations, such as India, the government subsidises energy consumption, so the savings fall into government coffers.
The US remains teacher’s pet though, adds Khalaf, with the growth forecast for the world’s most influential economy revised sharply upwards. Growth is now expected to be 3.6 per cent in 2015, up 0.5 percentage points from the October forecast.
The IMF also sounded notes of concern over Russia, and China. The Russian economy is expected to contract by 3 per cent in 2015, while China is expected to grow by 6.8 per cent, a 0.3 percentage point reduction from October’s forecast. This follows on official data released yesterday showing Chinese growth slowed to 7.4% in 2014, an enviable level of growth for advanced economies, but its lowest level in 24 years.