IMF Revises Low Growth Lower

The International Monetary Fund once again cut back its near term global growth forecast. Not only was the forecast for 2015 reduced by 0.2 percentage points but the growth rate now estimated for the year is 0.3 percentage points lower than the 2014 outcome. Decelerating growth will normally imply the weakest phase in the raw material offtake cycle. The IMF’s interpretation of the world economy matches the trajectory implied by a range of steel and non ferrous metal industry statistics from such groups as the World Steel Association, the International Lead Zinc Study Group and the International Copper Study Group. They all show a dip in the rate of raw material offtake growth in 2015. The momentum of forecast revisions is also of relevance to the outlook. Downward revisions will normally mean that the resources industry will have been overestimating demand and exaggerating the size of future market imbalances. PortfolioDirect uses the momentum of global growth forecast revisions as one indicator of cyclical positioning. Of its five key indicators (described here: (VIEW LINK) ) only one currently implies forward cyclical momentum.