IMF Sees Lower Growth (and No Raw Material Momentum Boost)

The International Monetary Fund has again pulled back its global growth forecasts. Its expected growth rates in 2016 and 2017 have been lowered by 0.1 percentage points in each year. This time, the main cause has been the vote in the UK to quit the European Union. The press briefing from the IMF head of research leaves an overwhelming sense that the IMF itself is none the wiser about what is going to happen. Despite its standard practice to avoid speculating about the economic impact of economic events, the IMF has provided a range of alternative scenarios which might emerge from the Brexit vote. Each scenario is more negative than the anticipated base case. The IMF has figuratively thrown its hands in the air as if to say ‘your guess is as good as mine’. From the resource sector viewpoint, the message is little changed. The momentum of global growth is insufficient for a significant acceleration in the growth of raw material demand. Without that, the current market balances remain tilted toward surplus with continued downward price pressures.