IMF cuts global economic growth forecasts
The International Monetary Fund cut its global economic growth forecasts on Tuesday, warning that the political impasse in the US over raising the debt limit could Authentic Michael Sam Jersey harm the world economy if it is not resolved. would harm the world economy if it fails to raise its borrowing limit.
The international lending agency said the global economy will grow 2.9 percent this year and 3.6 percent in 2014. Both are 0.2 percentage point lower than the group July forecasts. The main reason for the downgrade was slower growth in China, India, Brazil and other developing countries. economic growth this year to 1.6 percent and next year to 2.6 percent. Those are 0.1 percentage point and 0.2 percentage point lower than in July, respectively. partial government shutdown would last only a short period. debt.
to lift the debt ceiling would be a major event, Olivier Blanchard, the IMF chief economist, said at a news conference. Treasury officials say the government would quickly run out of cash and could default on its obligations if Congress doesn approve an increase in the borrowing limit by Oct. 17. Treasury bonds are a key part of the international financial system and a default would have global repercussions. For that reason, many analysts expect the borrowing limit will probably be increased on time. economy are slightly below many private sector forecasts. The group expects growth to increase next year because government spending cuts and tax increases, which took effect earlier this year, won drag nearly as much. is benefiting from steady consumer and business spending, the IMF said, fueled by a housing rebound, rising stock prices, and a greater willingness by banks to lend.
there are fiscal accidents, the recovery should continue, Blanchard said.
Europe economy is also benefiting as government spending cuts and tax increases ease. The IMF forecasts the 17 nations that use the euro currency will expand 1 percent in 2014, after shrinking 0.4 percent this year. Those estimates are mostly unchanged from July.
Many developing countries, particularly India, have been hurt by expectations that the Federal Reserve will soon slow its $85 billion a month in bond purchases. assets picked up.
The fund slashed its forecast for India growth 1.8 percentage points to 3.8 percent this year and 1.1 percentage points to 5.1 percent in 2014. It projects that Brazil economy will expand 2.5 percent this year, the same forecast as July. But it no longer expects growth to accelerate in 2014. It now expects 2.5 percent growth next year, or 0.7 percentage point lower than its previous forecast.
India central bank has raised interest rates in an effort to stem the flow of money leaving the country, a move that has also slowed growth.
Brazil economy has been hampered by poor infrastructure and high inflation. That has forced its central bank to also raise interest rates.
The IMF called on the Fed to clearly communicate its plans as it moves toward scaling back the bond purchases. But at the same time, it said the Fed should continue its efforts to stimulate the economy.