IMF cuts world growth forecast
Source: Agencies |
January 26, 2012, Thursday
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Print Edition
Print Edition
The eurozone debt crisis is escalating and dragging down the world economy, the International Monetary Fund said on Tuesday, as it sharply cut its outlook for global growth and called for policies to restore confidence.
The IMF chopped its 2012 forecast for global growth to 3.3 percent from 4 percent just three months ago, saying the outlook had deteriorated in most regions. It projected world growth would improve to 3.9 percent in 2013.
The Washington-based lender said economic activity was decelerating but not collapsing. But it warned that global growth would come in about 2 percentage points below its already soft forecast if European leaders allowed the crisis to fester.
For the first time since the debt turmoil erupted two years ago, the IMF said the 17-nation eurozone would likely slip into a mild recession in 2012, with a 0.5 percent contraction in output.
"The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere," the IMF said in its latest World Economic Outlook report.
"The most immediate policy challenge is to restore confidence and put an end to the crisis in the euro area by supporting growth while sustaining adjustment, containing deleveraging, and providing more liquidity and monetary accommodation," it added.
The IMF maintained its 1.8 percent growth forecast for the United States in 2012, but cut its projection for Japan to 1.7 percent from 2.3 percent in September.
It said economic activity in advanced economies would expand by 1.5 percent on average in 2012 and 2013, too sluggish to make a major dent in high unemployment rates.
The IMF said the US and other advanced economies would likely not escape unharmed if Europe's crisis escalated further.
The fund projected a sharp slowdown in the pace of growth in emerging and developing countries and urged them to focus policies to stimulate their economies. It now projects growth in emerging economies to reach 5.4 percent in 2012, down from the 6.1 percent it forecast in September.
It cut China's growth figure to 8.2 percent for 2012, down from 9.0 percent. Chinese growth should rebound to 8.8 percent in 2013, it added.
For fast-growing emerging Asia as a whole, the IMF reduced its growth outlook for 2012 to 7.3 percent from 8 percent.
The IMF said global oil prices would only ease slightly in 2012 despite slowing world growth.
The IMF chopped its 2012 forecast for global growth to 3.3 percent from 4 percent just three months ago, saying the outlook had deteriorated in most regions. It projected world growth would improve to 3.9 percent in 2013.
The Washington-based lender said economic activity was decelerating but not collapsing. But it warned that global growth would come in about 2 percentage points below its already soft forecast if European leaders allowed the crisis to fester.
For the first time since the debt turmoil erupted two years ago, the IMF said the 17-nation eurozone would likely slip into a mild recession in 2012, with a 0.5 percent contraction in output.
"The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere," the IMF said in its latest World Economic Outlook report.
"The most immediate policy challenge is to restore confidence and put an end to the crisis in the euro area by supporting growth while sustaining adjustment, containing deleveraging, and providing more liquidity and monetary accommodation," it added.
The IMF maintained its 1.8 percent growth forecast for the United States in 2012, but cut its projection for Japan to 1.7 percent from 2.3 percent in September.
It said economic activity in advanced economies would expand by 1.5 percent on average in 2012 and 2013, too sluggish to make a major dent in high unemployment rates.
The IMF said the US and other advanced economies would likely not escape unharmed if Europe's crisis escalated further.
The fund projected a sharp slowdown in the pace of growth in emerging and developing countries and urged them to focus policies to stimulate their economies. It now projects growth in emerging economies to reach 5.4 percent in 2012, down from the 6.1 percent it forecast in September.
It cut China's growth figure to 8.2 percent for 2012, down from 9.0 percent. Chinese growth should rebound to 8.8 percent in 2013, it added.
For fast-growing emerging Asia as a whole, the IMF reduced its growth outlook for 2012 to 7.3 percent from 8 percent.
The IMF said global oil prices would only ease slightly in 2012 despite slowing world growth.
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