IMF Predicts Slower Global Economic Growth

Posted October 9th, 2012 at 2:40 am (UTC-5)
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The International Monetary Fund is cutting its prediction for global economic expansion this year, and the fund's experts say the risks of serious economic problems are growing.

IMF chief economist Olivier Blanchard says that advanced economies are at risk of recession, and emerging markets like China are becoming increasingly affected.

“The world economic recovery continues, but it has weakened further. In advanced economies, growth is now too low to make a substantial dent in unemployment. And in major emerging markets, growth which had been strong earlier has also decreased.”

However, an IMF report, issued as key global financial officials meet in Tokyo this week, says there will not be a “hard landing” for emerging countries.

The forecast says global growth will slow to just a 3.3 percent annual rate this year, down from the estimate of 3.5 percent growth it issued in July.

Blanchard warns that things could be worse if Washington or Europe fail to cope with political and financial problems promptly and effectively. He says there is a “general feeling of uncertainty about the future.”

“(There are) worries about the ability of European policy makers to control the euro crisis. There are worries about the failure of U.S. policymakers to agree so far on a fiscal plan. There are worries about the ability of the Japanese policymakers to reduce sufficiently their budget deficit.”

The study predicts U.S. growth will be just 2.2 percent this year, and a bit faster in 2013.

Among the nations that use the euro, the overall economy is expected to shrink by four-tenths of one percent this year, and will improve in 2013. Developing nations in Asia are predicted to grow at an average pace of 6.7 percent this year, and faster next year.