News / Economy

    IMF Lowers Global Growth Outlook

    The International Monetary Fund (IMF) is predicting a further slowdown in the global economy's growth rate. The assessment comes in a closely-watched economic forecast in which the Fund blames the gloomy outlook on uncertainties with fiscal policies in the United States and Europe.

    The IMF says there is an “alarmingly high” risk of a global slowdown with an 80 percent chance of recession in the Euro zone next year.

    The global economy is predicted to rise 3.3% this year and 3.6% next year. In its previous forecast, three months ago, the IMF pegged growth this year at 3.5% percent and 3.9% in 2013.

    World GDP growth forecast for 2013. Source: IMFWorld GDP growth forecast for 2013. Source: IMF
    ​“The new element is the uncertainty, the degree of uncertainty, about policy - both in Europe and in the United States," said economist Olivier Blanchard, IMF's research director. "That's what worries us. At the same time it is sufficiently well identified that if the measures which have been promised are delivered in the case of Europe and if the U.S. avoids a fiscal cliff one can be optimistic or relatively optimistic about the future.”

    The fund recommends that after next month's presidential and congressional elections, America will have to act quickly or economic recovery will be derailed.

    At the beginning of 2013, a number of significant tax cuts expire and automatic spending cuts go into effect unless U.S. policy-makers act.

    While there is strong concern about Europe, the United States and Japan, the Fund also expects an economic slowdown in China and India, two countries whose economic booms helped the world recover from the most recent recession.

    The latest IMF report cautions that overall “confidence in the global financial system remains exceptionally fragile.”

    The IMF sees China continuing to be the primary driver of growth among developing Asia economies, as officials there accelerate approval of public infrastructure projects.

    Economists warn some of those Chinese state investments are unsustainable and inefficient in the long term.

    Ian Bremmer is president of the Eurasia Group, a New York-based political risk research and consulting firm. He acknowledges those concerns but contends China enjoys some protection because its present economy is fundamentally different.

    “The Chinese have a massive surplus. If they want to continue to use it to support unprofitable ventures, they can do that. If the international markets don't like what the Chinese are doing they cannot short them because the Chinese don't have a banking system," said Bremmer. "They can't put pressure on the Chinese to do different things the way they can with the Spaniards, the Italians or even the French.”

    The IMF forecast is more upbeat positive for sub-Saharan Africa, where regional growth is forecast to average above five percent, except for South Africa, which is hampered by its ties to Europe.

    The International Monetary Fund, which has 188 member countries, warns of continued uncertainty in the Middle East and North Africa amid political and economic transitions in the aftermath of the Arab Spring. In that region, real GDP growth is forecast to slow to about 1.25% this year, but expected to rebound moderately in 2013.

    The forecasts were issued as thousands of people, including central bankers, finance ministers and private sector executives gathered here for a week of meetings to discuss global economic issues.

    Steve Herman

    Steve Herman is VOA's Senior Diplomatic Correspondent, based at the State Department.

    You May Like

    Video Democrats Clinton, Kaine Offer 'Very Different Vision' Than Trump

    In a jab at Trump, Clinton says her team wants to 'build bridges, not walls'; Obama Hails Kaine's record; Trump calls Kaine a 'job-killer'

    Turkey Wants Pakistan to Close Down institutions, Businesses Linked to Gulen

    Thousands of Pakistani students are enrolled in Gulen's commercial network of around two dozen institutions operating in Pakistan for over two decades

    AU Passport A Work in Progress

    Who will get the passport and what the benefits are still need to be worked out

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movementi
    X
    July 22, 2016 11:49 AM
    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Poor Residents in Cleveland Not Feeling High Hopes of Republican Convention

    With the Republican Party's National Convention underway in Cleveland, Ohio, delegates and visitors are gathered in the host city's downtown - waiting to hear from the party's presidential candidate, Donald Trump. But a few kilometers from the convention's venue, Cleveland's poorest residents are not convinced Trump or his policies will make a difference in their lives. VOA's Ramon Taylor spoke with some of these residents as well as some of the Republican delegates and filed this report.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video With Yosemite as Backdrop, Obama Praises National Parks

    Last month, President Barack Obama and his family visited some of the most beautiful national parks in the U.S. Using the majestic backdrop of a towering waterfall in California's Yosemite National Park, Obama praised the national park system which celebrates its 100th anniversary this year. He talked about the importance of America’s “national treasures” and the need to protect them from climate change and other threats. VOA’s Julie Taboh reports.
    Video

    Video Counter-Islamic State Coalition Plots Next Steps

    As momentum shifts against Islamic State in Iraq, discussions are taking place about the next steps for driving the terrorist group from its final strongholds. Secretary of State John Kerry is hosting a counter-IS meeting at the State Department, a day after defense ministers from more than 30 countries reviewed and agreed upon a course of action. VOA Pentagon correspondent Carla Babb reports.
    Video

    Video Russia's Participation at Brazil Olympic Games Still In Question

    The International Olympic Committee has delayed a decision on whether to ban all Russian teams from competing in next month's Olympic Games in Brazil over allegations of an elaborate doping scheme. The World Anti-Doping Agency recently released an independent report alleging widespread doping by Russian athletes at the 2014 Winter Olympics in Sochi. So far, only Russian track and field athletes have been barred from the Summer Games in Brazil. VOA's Zlatica Hoke has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.
    Video

    Video Millennials Could Determine Who Wins Race to White House

    With only four months to go until Americans elect a new president, one group of voters is getting a lot more attention these days: those ages 18 to 35, a generation known as millennials. It’s a demographic that some analysts say could have the power to decide the 2016 election. But a lot depends on whether they actually turn out to vote. VOA’s Alexa Lamanna reports.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9079
    JPY
    USD
    106.10
    GBP
    USD
    0.7636
    CAD
    USD
    1.3106
    INR
    USD
    67.076

    Rates may not be current.