Global growth has plateaued at 3.7 per cent; clouds on the horizon: IMF
Washington, Oct 9 : Global growth has plateaued at 3.7 per cent, the International Monetary Fund (IMF) said Tuesday, with its chief economist warning the world that there are clouds on the horizon and growth has proven to be less balanced than hoped.
"Last April, the world economy's broad-based momentum led us to project a 3.9 per cent growth rate for both this year and next. Considering developments since then, however, that number appears over-optimistic: rather than rising, growth has plateaued at 3.7 per cent," IMF Chief Economist Maurice Obstfeld said as the world body released the World Economic Outlook, its annual flagship report.
Released during the annual IMF and World Bank meeting in Bali, Indonesia, the World Economic Outlook projects that global growth will remain steady over 2018 19 at last year's rate of 3.7 per cent. This growth exceeds that achieved in any of the years between 2012 and 2016, he said.
"It occurs as many economies have reached or are nearing full employment and as earlier deflationary fears have dissipated. Thus, policymakers still have an excellent opportunity to build resilience and implement growth-enhancing reforms," Obstfeld said.
But "there are clouds on the horizon," he said. "Growth has proven to be less balanced than hoped. Not only have some downside risks that the last WEO identified been realised, the likelihood of further negative shocks to our growth forecast has risen. In several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term. These concerns raise the urgency for policymakers to act," the top IMF official said.
Noting that growth in the United States, buoyed by a procyclical fiscal package, continues at a robust pace and is driving US interest rates higher, Obstfeld said US growth will decline once parts of its fiscal stimulus go into reverse.
"Notwithstanding the present demand momentum, we have downgraded our 2019 US growth forecast owing to the recently enacted tariffs on a wide range of imports from China and China's retaliation," he said, adding that China's expected 2019 growth is also marked down.
Domestic Chinese policies are likely to prevent an even larger growth decline than the one IMF projected, but at the cost of prolonging internal financial imbalances, he said.
"Overall, compared with six months ago, projected 2018 19 growth in advanced economies is 0.1 percentage point lower, including downgrades for the euro area, the United Kingdom, and Korea. The negative revisions for emerging market and developing economies are more severe, at -0.2 and -0.4 percentage point, respectively, for this year and next year," Obstfeld said.
With their core inflation rates largely quiescent, advanced economies continue to enjoy easy financial conditions. "This is not true in emerging and developing economies, where financial conditions have tightened markedly over the past six months," he said.
For emerging market and developing economies, gradually tightening US monetary policy, coupled with trade uncertainties and for countries such as Argentina, Brazil, South Africa, and Turkey distinctive factors, have discouraged capital inflows, weakened currencies, depressed equity markets, and pressured interest rates and spreads, he said.
Many emerging economies, he noted, are managing relatively well given the common tightening they face using established monetary frameworks based on exchange rate flexibility.
"But there is no denying that the susceptibility to large global shocks has risen. Any sharp reversal for emerging markets would pose a significant threat to advanced economies, as emerging market and developing economies make up about 40 per cent of world GDP at market exchange rates," the IMF chief economist warned.
Obstfeld said the impacts of trade policy and uncertainty are becoming evident at the macroeconomic level, while anecdotal evidence accumulates on the resulting harm to companies. "Trade policy reflects politics, and politics remain unsettled in several countries, posing further risks," he added.
He urged all countries to prepare their workforces for the ways that new technologies will change the nature of work.
"Ensuring that growth is inclusive is more important than ever. Unless growth can be made more inclusive than it has been, centrist and multilateral approaches to politics and policy will become increasingly vulnerable to the detriment of all," Obstfeld said.
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AI reshaping music, filmmaking in Kannada cinema
Bengaluru: Artificial Intelligence is slowly changing the way music and creativity are produced in the Kannada film industry, raising concerns among musicians, singers and technicians, The New Indian Express reported on Sunday.
Music composer, actor and director V Manohar reportedly said, AI is being used to write lyrics, especially in low-budget movies. Once lyrics are generated, AI can suggest thousands of tunes. It even asks whether the voice should be male or female. With one click, a complete song is ready.
“If this continues, singers and musicians will have less or no work in the coming days. But it may not succeed either. A few years ago, dubbing was allowed and people could watch movies in any language they preferred. But not many took to it as they wanted to watch a movie in the original,” TNIE quoted him as saying.
According to the report, Filmmaker Avinash U Shetty, a National Award winner, said resistance to new technology is not new. Those who resisted shifting from analogue to digital films years ago have now embraced it. The industry is now using only 10% of the AI potential. If it is scaled up, it can do unimaginable things. What we consider bad now, may not be after five years.
Highlighting the cost advantage, Sangamesh, an independent creator reportedly said, he made a three-minute video using AI for just Rs 4,500. Earlier, the same work would have cost nearly Rs 15 lakh. I finished the entire project in three days. The only expense was the AI software subscription, he said.
These days, it has become difficult to differentiate between the real and AI. AI is creating artistes. Scenes like war, big fights and dance can be shot with a lesser number of artistes. Then with the aid of visual effects and AI, you can achieve what you have in mind, he said.
Actor-director D P Raghuram felt that while AI has made an impact on music, it lacks emotional depth. Cinema earlier involved hard work and strong emotional connections. AI can help improve our work, but creativity should remain human, he reportedly said.
As per the report, earlier, Kannada cinema employed hundreds of junior artistes, who not only earned wages but also shared meals on sets and formed lasting bonds with stars like Dr Rajkumar, Vishnuvardhan and Ambareesh. Today, filmmakers fear that increasing dependence on AI could reduce such human connections, turning creativity into just another automated process.
