Global economic growth will reach just 2.8 per cent by 2030, a full percentage point below the historical average unless major reforms are made to boost productivity and leverage technologies such as artificial intelligence, the IMF said on Wednesday.

The International Monetary Fund released a chapter of its forthcoming World Economic Outlook (WEO) that showed further declines in the global growth rate, which has slowed steadily since the 2008-2009 global financial crisis.

“Without ambitious steps to enhance productivity, global growth is set to fall far below its historical average,” the IMF said, warning that expectations of weak growth could discourage investment, possibly deepening the slowdown.

The global lender said the persistent low-growth scenario, combined with high-interest rates, could also restrict governments’ ability to counter economic slowdowns and invest in social welfare or environmental initiatives.

“All this is exacerbated by strong headwinds from geoeconomic fragmentation and harmful unilateral trade and industrial policies,” it said in a blog accompanying Chapter 3 of the WEO, to be released in full next Tuesday.

A year ago, the IMF said it expected medium-term growth to hover around 3 per cent. The new forecast reflects downward revisions for medium-term growth across all income groups and regions, most significantly in emerging market economies.

The IMF urged countries to take urgent action to counter the weakening growth outlook, warning that it worsened prospects for living standards and global poverty reduction.

China blow

Fitch cut its outlook on China’s sovereign credit rating to negative on Wednesday, citing risks to public finances as the economy faces increasing uncertainty in its shift to new growth models.

The outlook downgrade follows a similar move by Moody’s in December.