IMF: Global growth slowing
The pace of global economic growth is slowing and the major developed nations continue to pose the major threats as they battle with high debt and below-par growth, the International Monetary Fund said Wednesday in its latest world forecast.
The IMF forecast world growth of 3.5 percent for 2013, slightly less than the organization projected in its previous forecast in October.
IMF chief economist Olivier Blanchard said he thought current conditions warranted “some cautious optimism” because “acute risks” have decreased — most notably the possibility that the euro currency union might disintegrate.
But he said growth remains weak through much of the developed world and, in particular, is “not enough to make a dent in the unemployment rate” — projected to remain at an elevated 8 percent among industrialized countries.
The fund's forecast puts it largely in line with that of World Bank economists who last week also projected slowing growth and continued divergence between fast growing economies in Asia and Latin America, stodgy but consistent growth in the United States, and recession in the heart of Europe.
U.S. growth is projected at 2 percent, about a tenth of a percentage point below the IMF's October figure and a less optimistic forecast than that of the Federal Reserve. Growth has essentially stalled in the United Kingdom and Japan — with Japan only projected to grow next year because of major new government stimulus spending.
A possible exit by the United Kingdom from the European Union could pose another shock if it disrupts trade or financial ties with the continent. U.K. Prime Minister David Cameron has promised an up or down vote on the issue.
Prospects for the euro zone remain dimmest of all: The IMF expects the 17-nation currency region to remain in recession for the year. The IMF previously forecast the euro-zone economy would grow by 0.2 percent in 2013. Between tepid growth in Germany and France and continued decline in Italy and Spain, the region's economy is expected to contract by 0.2 percent over the year.