IMF cuts world growth forecast for 2013, 2014

WASHINGTON, USA – The International Monetary Fund on Tuesday, October 8, lowered its growth forecast for the global economy and warned the outlook could get bleaker if the US political standoff over finances drags on.

The global economy is expected to grow 2.9% year-over-year in 2013 and 3.6% in 2014, the IMF said, revising July estimates down by 0.3 and 0.2 percentage points, respectively.

Previously, the IMF also cut its growth forecast for the Philippines: 6.75% in 2013 from the 7% estimate in July. 

Four years after the Great Recession ended, “global growth remains in low gear,” the IMF said in its World Economic Outlook report.

Advanced economies, in particular the United States, are showing signs of pick-up, while emerging-market (EM) economies, although still accounting for most global growth, are losing more momentum than previously thought.

“Global growth is still weak, its underlying dynamics are changing, and the risks to the forecast remain to the downside,” the IMF said.

Two risks were a particular worry: the US Federal Reserve’s plan to exit the exceptionally easy-money policy it has pursued to pull away from the brink of depression, and China’s slowing growth.

Overall, the IMF left unchanged its gross domestic product (GDP) growth forecasts for the advanced economies, at 1.2% in 2013 and 2% in 2014.

In the US, growth in the world’s largest economy would tick along at 1.6% in 2013, picking up to a 2.6% pace next year, slightly less activity than the IMF projected in July.

Growth forecasts for China were lowered a few tenths of a point for both years, to 7.6% in 2013 and 7.3% in 2014. – Rappler.com