News / USA

IMF Cuts Growth Forecast, Warns US on Borrowing Limit

IMF Cuts Growth Forecast, Warns US on Borrowing Limiti
X
October 09, 2013 3:16 AM
The International Monetary Fund has trimmed its forecast for the global economy, citing slower growth in developing nations. While the estimates are down slightly from earlier projections, the IMF sees the global economy rebounding from 2.9 percent this year to 3.6 percent in 2014. For now, the biggest source of uncertainty may be the United States.
Watch video from VOA's Mil Arcega
VOA News
The International Monetary Fund is cutting its forecast for economic growth throughout the world -- mostly because expansion has slowed in China, India, Brazil and other developing countries.

The IMF said Tuesday it expects the global economy to advance 2.9 percent this year and by 3.6 percent in 2014, both down from previous forecasts. The Washington-based agency said that economic growth had slowed or flattened throughout the world.

At the same time, the IMF's chief economist, Olivier Blanchard, warned there could be major financial disruptions throughout the world if the United States does not increase its borrowing limit in the coming days to avoid a default on its financial obligations. The U.S. government is in the midst of an eight-day partial shutdown and at the same time is running out of money to pay its bills.

U.S. financial officials said Congress needs to increase the country's $16.7 trillion debt ceiling by October 17 so it can continue to borrow money to fund its operations and pay interest on vast government securities held by China, Japan and other overseas investors.

Blanchard said the government shutdown, if it does not last too long, is likely to have a limited effect on the world economy, but that a U.S. debt default could be calamitous.

"Failure to lift the debt ceiling would, however, be a major event. Prolonged failure would lead to an extreme fiscal consolidation and almost surely derail the U.S. recovery. But the effect of any failure to repay the debt would be felt right away, leading to potential major disruptions in financial markets, both in the United States and abroad," Blanchard stated.

The IMF forecast 7.3 percent growth next year in China, the world's second largest economy after the U.S., down from a 7.6 percent advance this year. It sees growth expanding by 5.1 percent in India, an improvement over this year, but still lower than predicted. The IMF said Brazil's growth would be steady at 2.5 percent this year and next.

At the same time, the IMF said that the American economy would grow a meager 1.6 percent this year and advance by 2.6 percent in 2014, with both forecasts down from July forecasts.

The IMF said the economy in the 17-nation Eurozone would fall four-tenths of a percent this year and grow 1 percent in 2014. Collectively, the eurozone has a larger economy than the U.S. and is an important trading partner throughout the world, but debt-ridden economies on its western and southern flanks led to an 18-month recession.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs