Back in January the IMF thought the world might manage growth of 3.7% this year. That dropped to 3.6% in April, to 3.4% in July, and to 3.3% in the new report. If growth is written down any more then this year’s performance will come in below that in 2013, of 3.3%, making 2014 the fourth consecutive year in which global output has slowed relative to the prior year’s showing. The steady deterioration in the global economy’s performance is remarkable for several reasons, including just how long it has taken the world to catch on to the trend.
The news could get worse in future, the IMF reckons. Its current projections assume sensibly accommodative fiscal and monetary policy, as well as a decline in geopolitical tensions. That is disconcerting. The growth slowdown since 2010 is already one of the most dramatic of the last 40 years, comparable to the swoons that accompanied the Latin American crises of the late 1980s and the Asian crisis of the late 1990s (though not as large as the drop in 2008-9). Officials in Washington, gathered for the autumn meetings of the World Bank and IMF, will be hoping the outlook shocks governments into decisive action to support global growth. Unfortunately, policy makers seem to be growing inured to bad economic news.