Roundup: IMF warns global economy moderate, uneven

The International Monetary Fund (IMF) said on Tuesday that the global economy remains moderate and uneven, underlining the growing divergence among the world's major economies amid varying impacts of currency fluctuations and lower oil prices.

The global economy is estimated to grow 3.5 percent in 2015, on par with the forecast it made in January. Growth rate is expected to pick up to 3.8 percent in 2016, the Washington-based lender said in its biannual World Economic Outlook (WEO) report.

The outlook reflects an increase in growth in advanced economies but offset by a decrease in growth in emerging market and developing economies,

"Global growth remains moderate, with uneven prospects across the main countries and regions ... Several advanced economies and some emerging markets are still dealing with crisis legacies, including persistent negative output gaps and high private or public debt or both," the report said.

Growth in the United States is projected to hit 3.1 percent in 2015, with domestic demand supported by lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance.

Euro area is showing signs of picking up, supported by lower oil prices, low interest rates, and a weaker euro. After a disappointing 2014, growth in Japan is also projected to pick up, sustained by a weaker yen and lower oil prices.

China is expected to see growth moderate to 6.8 percent in 2015 and 6.3 percent in 2016. It's growth rate stood at 7.4 percent in 2014.

Gian Maria Milesi-Ferretti, the IMF's deputy director for research, said at a press briefing that the slowdown in China reflects the country's transition from growth built on often- wasteful investment in factories and real estate to slower but steadier growth built on spending by Chinese consumers. "We think it is a good slowdown for China," he said.

However, the report noted previous excesses in real estate, credit and investment will continue to unwind, and ongoing implementation of structural reforms and lower commodity prices are expected to expand consumer-led activities, partially buffering the slowdown.

"For China, the main risk is failure to implement the reform agenda to address financial risks, rebalance the economy and tap new sources of growth," the report said.

The IMF warned the distribution of risks to global growth is now more balanced relative to the end of last year, but still tilted to the downside.

Geopolitical tensions could intensify, disruptive asset price shifts in financial markets remain a concern. A stronger dollar could trigger financial tensions elsewhere, and the risks of stagnation and low inflation in advanced economies are still present, it said.

IMF Managing Director Christine Lagarde said last week that the global growth was just not good enough to offset the lingering impact of the Great Recession, calling on countries to take measures to prevent the mediocre growth from becoming "new reality. "

WEO is the flagship report of the IMF. It is released prior to the Spring Meetings of the IMF and the World Bank, which is scheduled to be held during April 17-19 in Washington D.C., gathering central bank governors, finance ministers and scholars to discuss key global economic issues and policy action. Endite