Caught in a financial crisis, how big will the waves from the Greek drama and a possible exit from the euro be when they crash on the shore of the global economy?
The impact will be limited. That’s the prediction of the International Monetary Fund which has lowered its global economic growth forecast for 2015.
The IMF chief economist Olivier Blanchard, who held his last press conference before leaving his post spelled out the reasons saying Greece is a small part of the world economy.
“What we know is that mechanical links between Greece and the rest of the world are limited, be it on the trade side or on the finance side. The IMF is an institution which has 188 members, most of them being poorer than Greece, and all of them not having had the kind of breaks that some people would like us to give to Greece,” he told reporters.
The IMF trimmed its forecast for global growth from an estimated to 3.5 percent which it announced in April to an estimated 3.3 percent. Growth should speed up to 3.8 percent next year it said.
Much of the blame for the lower growth forecast was pinned by the IMF on the US. A drag on the world economy because of “an unexpected output contraction” it said.
Despite the recent stock market volatility the forecast for growth in China remains unchanged at 6.8 percent. The IMF said the “the bubble has burst” when talking of the recent wild swings in China’s stock market.