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    IMF downgrades growth prospects for 2016

    The outlook for global economic growth this year has been downgraded by the IMF.

    The International Monetary Fund (IMF) has downgraded its forecasts for global economic growth in 2016, sparked by weaker-than-expected Chinese data.

    With the Chinese economy growing by 6.9% in 2015 - the first time a figure of less than 7% has been recorded in almost 25 years - the IMF has implemented a 0.2 percentage point reduction in its predictions for global growth this year to 3.4%.

    IMF economic counselor Maurice Obstfeld stated: "We don't see a big change in the fundamentals in China compared to what we saw six months ago, but the markets are certainly very spooked by small events there that they find hard to interpret.

    "It's not a stretch to suggest that [markets] may be reacting very strongly to rather small bits of evidence in an environment of volatility and risk aversion.

    Indeed, major indices across Europe and the US underwent a considerable rally on Tuesday (19 January 2016), helped more by the prospect that the negative start to the year so far could prompt further central bank stimulus measures in the coming weeks.

    As of 4.07 pm GMT, the Dow Jones Industrial Average had registered an increase of 0.59% shortly after the opening of markets in the US, while the S&P 500 was up by 0.55% and the Nasdaq Composite Index had gained 0.78%.

    Elsewhere, the UK's blue chip index the FTSE 100 had gained 1.63% in value from the opening of markets on Tuesday and the German DAX Index had gained 1.73%.


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