The International Monetary Fund recently revised downward its forecast for global growth to 3.3 percent from 3.5 percent, the lowest level since 2009. Business executives, advisors, and other leaders must understand the fundamental changes that informed the revision and how those changes may impact their organizations.
Before we dig in to the report itself, it is important to note that forecasting global growth is a very complicated business and economists are generally not accurate down to the basis point. The nearby graphic from Bloomberg shows how frequently economists and other forecasters tend to understate growth. However, that does not mean forecasts are without value; the truth is quite the opposite.
All organizations should take time now to evaluate their supply chains and customer concentrations. Even if your organization operates exclusively within the United States, your supply chain is likely global. Furthermore if your customers are other businesses a global slowdown may affect those customers’ demand for, or ability to pay for your goods or services.
All organizations should take time now to evaluate their supply chains and customer concentrations. Even if your organization operates exclusively within the United States, your supply chain is likely global.
Finally, while the headline forecast is less important than the direction and revisions to that forecast, 3.0 percent remains an informative watermark for global growth. Typically, global growth below 3.0 percent creates, or at least corresponds to, a drag on growth in the U.S. economy. While we strongly encourage you to read below the headline, a headline forecast below 3.0 percent would be concerning.