IMF set to cut outlook for global growth
Source: Bloomberg News |
July 7, 2012, Saturday
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Print Edition
Print Edition
THE International Monetary Fund will reduce its estimate for global growth this year on weakness in investment, jobs and manufacturing in Europe, the United States, Brazil, India and China, Managing Director Christine Lagarde said yesterday.
"The global growth outlook will be somewhat less than we anticipated just three months ago," Lagarde said in a speech in Tokyo. "And even that lower projection will depend on the right policy actions being taken."
The new outlook will be announced in 10 days, after an April estimate of 3.5 percent, she said.
Interest-rate cuts in China and Europe on Thursday and the Bank of England's boost to an asset-purchase program underscored the fragility of the global recovery as austerity measures and debt burdens weigh on advanced nations. Lagarde is pressing for fiscal union in Europe to aid growth and financial stability as nations such as Greece wrestle with balancing their books.
The "key emerging markets" of China, Brazil and India are showing signs of slowdown, Lagarde said. Those three countries along with Russia will comprise more than 20 percent of the world's economy this year, according to IMF data.
"Over the past few months, the outlook has regrettably become more worrisome," Lagarde said. "Many indicators of economic activity - investment, employment, manufacturing - have deteriorated. And not just in Europe or the US."
The IMF has already lowered its US growth estimate to 2 percent from April's 2.1 percent.
European Union leaders agreed at a June 28-29 meeting to loosen bailout rules, lay the foundations for a banking union and break the link between sovereign and banking debt through the direct recapitalization of lenders.
Japanese Prime Minister Yoshihiko Noda told Lagarde that sustained gains in the yen because of the euro region's crisis are damaging his country's economy, according to a statement released by his office yesterday.
"The eurozone crisis is the most important problem facing the global economy at present," he said in the statement. The strength of the yen "does not reflect the real state of Japan's economy."
"The global growth outlook will be somewhat less than we anticipated just three months ago," Lagarde said in a speech in Tokyo. "And even that lower projection will depend on the right policy actions being taken."
The new outlook will be announced in 10 days, after an April estimate of 3.5 percent, she said.
Interest-rate cuts in China and Europe on Thursday and the Bank of England's boost to an asset-purchase program underscored the fragility of the global recovery as austerity measures and debt burdens weigh on advanced nations. Lagarde is pressing for fiscal union in Europe to aid growth and financial stability as nations such as Greece wrestle with balancing their books.
The "key emerging markets" of China, Brazil and India are showing signs of slowdown, Lagarde said. Those three countries along with Russia will comprise more than 20 percent of the world's economy this year, according to IMF data.
"Over the past few months, the outlook has regrettably become more worrisome," Lagarde said. "Many indicators of economic activity - investment, employment, manufacturing - have deteriorated. And not just in Europe or the US."
The IMF has already lowered its US growth estimate to 2 percent from April's 2.1 percent.
European Union leaders agreed at a June 28-29 meeting to loosen bailout rules, lay the foundations for a banking union and break the link between sovereign and banking debt through the direct recapitalization of lenders.
Japanese Prime Minister Yoshihiko Noda told Lagarde that sustained gains in the yen because of the euro region's crisis are damaging his country's economy, according to a statement released by his office yesterday.
"The eurozone crisis is the most important problem facing the global economy at present," he said in the statement. The strength of the yen "does not reflect the real state of Japan's economy."
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