AKIPRESS.COM - The International Monetary Fund has added to concerns about the health of the global economy by cutting its growth forecasts for the next two years and warning that recovery from the financial crisis could be derailed altogether if key challenges are mishandled.

The Washington-based body said world output would be 0.2 points lower in 2016 and 2017 compared with forecasts made just three months ago – and that the risks to its predictions were to the downside, reports The Guardian.

In an update to its World Economic Outlook, the IMF said growth was put at 3.4% this year and 3.6% in 2017. It said central banks should continue to boost growth and that finance ministries should bolster investment spending where possible. It also warned that a “tide of refugees” was putting the EU under strain and that action was needed to ensure that migrants could find jobs.

The IMF said: “Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalised slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the United States. If these key challenges are not successfully managed, global growth could be derailed.”

It added that the downward revisions largely reflected a more pessimistic view of the prospects for some countries in the emerging world since October. Brazil’s recession was proving to be deeper and more protracted than previously estimated, while the forecasts for Russian and Saudi Arabian growth have also been cut.

Brazil, Russia and Saudi Arabia have been badly affected by the falling oil price, which has crashed further since the IMF updated the WEO. The forecasts assume an oil price of almost $42 a barrel in 2016, substantially higher than Monday’s level of about $28.