US bank Citi said on Wednesday that it cut its global economic growth forecast for 2016 for the fifth consecutive month, lowering its call on next year's world expansion to 2.8 percent from 2.9 percent. "We keep our 2015 global growth forecast at 2.6 percent, but cut our 2016 forecast to 2.8 percent from 2.9 percent - the fifth consecutive downgrade," the bank told clients.
"Adjusted for mis-measurement of China's GDP data, "true" global growth will probably be below 2.5 percent in both 2015 and 2016 (versus the 3 percent long-run norm). Risks probably remain to the downside." Citi's economics team, led by chief economist Willem Buiter, said it expected further easing from the European Central Bank, the Bank of Japan, the People's Bank of China and the Reserve Bank of Australia.
And it said it expected "very gradual and delayed tightening" by the Federal Reserve and Bank of England. Buiter has said previously that global growth below 3 percent with a significant output gap represented an effective world recession. The Citi note added the upcoming International Monetary Fund review will probably see China's yuan join the IMF's Special Drawing Rights currency basket from late-2016.
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