The International Monetary Fund lowered its growth forecast for Israel, as part of a new, pessimistic global forecast published on Tuesday. Global economic growth is slowing more than expected, it stated in the report, and chances of further cuts to the outlook are high.
In a previous forecast, issued in October, the IMF predicted Israel’s economy would expand by 3.6% in 2018, but it grew only 3.3%. The IMF predicted that Israel’s economy would expand 3.5% this year, but has now cut the forecast to 3.3% for 2019 and 2020. In 2024, the IMF predicts Israel’s economy will expand by only 3%. It anticipates that Israel’s unemployment level will remain steady at 4%.
The IMF warned that Israel’s government debt could increase to 3.5% for 2019, and that while it could drop in the future, it won’t be within the government’s fiscal target range over the medium term.
The IMF also reduced its growth forecast for the global economy to 3.3% for the year, after forecasting 3.5% in January. This would be the lowest rate of global economic growth since 2009, when the world was in the throes of an international financial crisis. The IMF cites increased tariffs and weaker economic growth in several developed economies as factors likely to harm the global economy. It anticipates the world’s developed economies will grow a scant 1.7% this year.
The IMF’s chief economist, Gita Gopinath, warned economic recovery was by no means certain in the short term. “This is a delicate moment for the global economy,” IMF chief economist Gita Gopinath told the media in Washington. However, the IMF stated a recovery may come in the second half of 2019. It noted the U.S. Federal Reserve Bank’s decision to halt interest rate increases and China’s recently published manufacturing figures as positive factors contributing to that growth. Key risks included a U.S.-China trade war and a potentially disorderly British exit from the European Union, it stated. It forecast global growth of 3.6% for 2020, but only 1.7% among developed economies.
With reporting by Reuters.