IMF Kills the Mood…Again
The warning:
The world economy has entered a “dangerous new phase” of sharply lower growth, the International Monetary Fund (IMF) has warned.
Olivier Blanchard, the IMF’s chief economist, said late on Tuesday that the global economy’s “recovery has weakened considerably”, adding that “strong policies are needed to improve the outlook and reduce the risks”.
As a result, the international lending organisation has sharply downgraded its economic outlook for the US and Europe through the end of next year.
The IMF expects the US economy to grow just 1.5 per cent this year and 1.8 per cent in 2012, down from its June forecast of 2.5 per cent in 2011 and 2.7 per cent next year.
To achieve even that still-low level of growth, the US economy would need to expand at a much faster rate in the second half of the year than its 0.7 per cent annual pace in the first six months.
Last month Standard & Poor cut the long-term US credit rating by one notch to AA+ with a negative outlook, amid fears about budget deficits.
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