In its April 2013 World Economic Outlook (WEO) titled “Hopes, Realities, Risks”, the IMF revised down (again) its global economic forecast for this year to 3.3% from 3.5% in its Jan13 update.
The figure remained unchanged for next year at 4%. Brazil’s growth had the biggest downward revision of 0.5ppt followed by France and Italy of 0.4ppt each. Meanwhile, Japan and ASEAN-5(led by the Philippines and Malaysia) see an upward revision of 0.4ppt and 0.3ppt, respectively. The IMF did not change its forecast for Indonesia’s growth of 6.3% and 6.4% in 2013 and 2014, respectively
Overall, the IMF still sees developing economies to be the engine of global growth in 2013 and next year while recession is expected to linger on the euro area. Global downside risks are revolving around the absence of strong fiscal consolidation plans in advanced countries. Thus, failing to meet the fiscal consolidation could lead protracted period of stalled growth, the IMF says.
Despite the IMF expects a better global picture this year, the 2013 global growth number has been revised down for three consecutive times, suggesting the recovery will remain fragile. Moreover, the fact that the growth of developing economies recorded a higher downward revision than advanced economies – usually the opposite – also signals a rising downside risk on emerging countries. Combined with lingering fiscal risk in advanced economies, we believe Indonesia’s economy will definitely be impacted. We expect to re-visit again our macroeconomic forecasts, especially our growth forecast soon with a high likelihood on correcting the growth number down marginally to below 6.3%.