Citi downgrades 2016 global growth forecast to 2.5%

[NEW YORK] Citi economists on Wednesday marked down their forecast on 2016 global economic expansion to 2.5 per cent from 2.7 per cent due to slowing activity in developed economies in addition to weakening emerging markets.

They said there is a risk the world economy may grow below 2 per cent due to a probable "mismeasurement" of Chinese growth data and possibly a more severe than expected deterioration among emerging economies.

"Global growth prospects are worsening further, with deterioration across advanced economies alongside previous weakness in emerging markets," Citi economists wrote in a research note.

They said they anticipate more policy easing from the European Central Bank and Bank of Japan, but "suspect this will provide only limited stimulus." They noted Britain's referendum on whether to stay in the European Union later this year is "a key extra near term global risk."

A "Brexit," if it were to happen, would hurt the UK and EU economies, they said, referring to a possible withdrawal of Britain from the European Union.

REUTERS