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

A veteran journalist, Steve Herman is VOA's Southeast Asia Bureau Chief and Correspondent, based in Bangkok.

You May Like

Captured IS Militants Explain Why They Fought

Fighters from Turkey, Syria tell VOA Kurdish Service what drew them to extremism, jihad More

Security Experts Split on Kenyan Barrier Wall

Experts divided on whether initiative aiming to keep out al-Shabab militants is long-awaited solution or misguided effort More

Video Philippines Wants Tourists Spending Money at New Casinos

Officials say they hope to turn Manila into the next Macau, which has long been Asia’s gambling hub More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.9211
JPY
USD
119.18
GBP
USD
0.6722
CAD
USD
1.2509
INR
USD
62.518

Rates may not be current.