In a world already weighed down by too much debt, new troubles are bubbling up. The Ebola virus, terrorist attacks and war are undermining many countries, which means “downside risks have increased” for the global economy.
That gloomy assessment was released Tuesday by the International Monetary Fund. Its forecast for this year’s average global growth slid to 3.3 percent, down 0.4 percentage point from April.
Stock investors, reacting to various reports about slowing global growth, sold shares. By the market’s close, the Dow Jones industrial average had tumbled 272.58 points, or 1.6 percent, to 16719.33.
One man who is feeling particularly pessimistic is Moses Kpughur Tule, director of the Monetary Policy Department at Nigeria’s central bank. He came with a heavy heart to the IMF/World Bank’s annual fall meetings, being held this week in Washington.
Kpughur Tule said that as this year was beginning, he’d had high hopes for West Africa. He saw that in 2013, the nearby countries of Sierra Leone and Liberia had ranked second and sixth among the top 10 countries with the highest GDP growth in the world.
He was especially encouraged to see Sierra Leone’s boom in bauxite mining. That growth meant the country, which had been ripped apart by civil war, would be able to rebuild roads and start trading more with Nigeria.
But then this summer, the Ebola virus began killing thousands in West Africa, and suddenly the region’s economic picture changed.
“Ebola is definitely having a broad impact,” Kpughur Tule said.
The disease has disrupted mining operations and air travel. Curfews have made it difficult for people to get to work in Sierra Leone and Liberia, he said. For business owners, such troubles mean “you can’t restock when you run out of inventory,” he said. “You can’t export or import – so it’s having a big impact on the whole region.”
At this point, the IMF and World Bank are still projecting most African economies will expand at a moderate pace. But for the continent, there are growing “downside risks that require enhanced preparedness” by governments. Such preparations could mean taking on more government debt and having less revenue for building infrastructure, Kpughur Tule noted.
But Africa is far from being the only place with worries. In the Middle East, growth will be only “modest” because the region is being dragged down by “a civil war in Syria, the Islamic State’s (ISIS) control of large swathes of Syria and Iraq, a devastating war in Gaza, ongoing insurgencies in Libya and Yemen; largely unfinished transitions in Egypt and Tunisia, and uncertainty about world oil prices,” according to a World Bank assessment.
Here’s a wrapup of IMF and World Bank assessments for other areas:
– In Europe, growth continues to disappoint. Economists see a gradual, but weak, recovery taking hold, but also say the risk of another recession is rising.
– In Russia, the conflict with Ukraine has brought on tough economic sanctions. Growth in 2015 will be only a miserable 0.5 percent.
– In China, growth is expected to decline slightly.
– In Latin America, the growth rate will decrease by half this year, to just 1.3 percent.
But if you happen to live in the United States, you should cheer up – your outlook is good.
The IMF says the U.S. economy is experiencing “robust employment growth.” Economists see 3 percent growth in the United States in 2015, and expect “strong” employment growth in the coming year.