WASHINGTON — The International Monetary Fund warned on Tuesday that continued weak growth in emerging economies would act as a drag on global growth despite an improving outlook in the United States and Europe.
The fund as central bankers, finance ministers, academics and financiers from around the world converged here for a week’s worth of networking, deal-making and crisis management (in the case of Greece and its continuing debt talks).
The fund highlighted how high levels of debt and fragile banks — in addition to slowing emerging markets — could pose threats to sustained economic growth.
“A number of complex forces are shaping the prospects around the world,” said Olivier Blanchard, the ’s chief economist. “Legacies of both the financial and the euro area crises — weak banks, and high levels of public, corporate and household debt — are still weighing on spending and growth in some countries. Low growth in turn makes deleveraging a slow process.”
The fund, which for some time has been making the case that the world’s post-crisis recovery remains uneven and fragile, made its most drastic downward growth revisions in large emerging-market economies.
Growth forecasts for Brazil, Russia and Mexico were slashed for 2015, with a mix of dicey politics, weak commodity prices and volatile exchange rates cited as contributing factors.
Growth for emerging markets next year is expected to come in at 4.3 percent, the fifth consecutive year that activity has decreased compared with the previous year. There were some outliers: India is projected to grow at 7.5 percent this year and next, which would put it ahead of China as the fastest growing of the large emerging markets.
China, once a main driver of global growth, is now expected to grow at 6.8 percent in 2015 and 6.3 percent in 2016, with overheating property markets and questionable loans remaining a concern.
Over all, the fund estimates global growth for this year of 3.5 percent, increasing to 3.8 percent in 2016.
Emerging market experts have been arguing for some time that these economies are diverging. In one sector are the economies that are putting into effect economic reforms and benefiting from investor inflows, as in China, India, Indonesia and the Philippines.
Then there are the growth laggards, which have been hampered with governance problems and commodity downturns, like Brazil and Russia.
“Growth is harder to come by these days, and that is why lots of countries now are focusing more on reforms,” said Samy Muaddi, an emerging markets bond manager at T. Rowe Price in Baltimore.
The fund also upgraded its economic forecast for the eurozone, projecting growth of 1.6 percent in 2015. Economists cited the renewed sense of optimism surrounding the as a means to stimulate economic activity. The relatively positive outlook for Europe contrasts with the fund’s comments on Europe last fall when it took Germany to task for not doing more to jump-start a recovery in Europe.
Now there are strong signs of increased bank lending and economic activity in Germany, Spain and even Italy, where the reform measures of the country’s new prime minister, Matteo Renzi, are having a positive effect.
With the United States set to grow at 3.1 percent this year and next, the fund said that the large developed economies would need to assume a dominant role in driving global growth. Low interest rates and lower oil prices would help, economists said.
The fund pointed out that the dollar’s recent strong run of late could add half a percent to global growth, with the stimulative effect of weaker currencies in Japan and Europe prevailing over reduced exports in the United States.
Still, as equity markets hit fresh highs, lifted by a new wave of large-scale corporate deal-making, more economists are coming around to the view that the American economy is strong enough to absorb an expected increase in interest rates later this year by the Federal Reserve.
“The U.S. economy is in very good shape,” said Rick Rieder, a senior bond executive at the asset management giant BlackRock, citing the quarter-million jobs the economy has been able to create in some months.
The question of whether Greece will be able to strike a deal with its creditors before running out of money will be a major topic of discussion this week. Many of the major players — including the Greek and German finance ministers, Mario Draghi of the European Central Bank, and Jeroen Dijsselbloem, who represents European creditors — will be in town this week.
While the fund revised down its growth forecast for Greece, its estimate of 2.5 percent for this year seems wildly off the mark. Most economists who follow Greece say the country will be lucky to grow at 1 percent this year as deposits continue to leak out of the country’s banks amid fears of a messy exit from the eurozone.
The two leaders in the Greek debt situation will get a chance to present their cases publicly on Thursday, when Yanis Varoufakis, the Greek finance minister, and his German counterpart, Wolfgang Schäuble, are scheduled to speak, separately, at the .