What's going on?

On Wednesday, the International Monetary Fund (IMF � a sort of bank for countries) cut its forecast for China’s economic growth � and although unsurprising, the rest of the world is still on tenterhooks…

What does this mean?

The IMF was perhaps a day late to the party: on Tuesday, the World Bank lowered its forecasts for global economic growth � citing the ongoing trade war between the US and China as a key reason. China comprises one third of global growth, so a slowing Chinese economy reduces the world�s economic speed (tweet this).


China thinks its economy will grow between 6% and 6.5% this year, its lowest annual rate since 1990. And the IMF�s lowered forecast of 6.2% puts it right in that ballpark, albeit below estimates made by other economists � who perhaps expect a larger impact from the government�s growth-boosting measures like $300 billion worth of tax cuts.

Why should I care?

For markets: Central banks are stepping in.

On Tuesday, Australia�s central bank cut interest rates to record lows. The country�s been experiencing sluggish growth � lower rates should encourage lending and spending, stimulating economic growth. Stateside, the Federal Reserve�s chair said the bank would do the needful to sustain American growth. And the European Central Bank is likely to announce further details on Thursday of its growth-boosting plan to offer low cost long-term loans to eurozone banks � in the hope of encouraging those banks to lend to companies that�ll then spend.

The bigger picture: Lower interest rates miss the applause.

The Fed said in March that it wouldn�t raise interest rates in 2019 � but simultaneously lowered its growth projections. Investors may have worried that any potential benefits � such as companies borrowing and spending more � would be lost. But a potential rate cut (as some investors expect) alongside unchanged economic growth forecasts might soon be warmly welcomed by investors.