IMF is Gloomy on Global Growth, but Smiles on Britain
The International Monetary Fund has turned more gloomy about the state of the world economy. The global economy is growing more slowly than expected, with risks to that growth increasing especially in emerging markets, says the IMF in an update to its World Economic Outlook (WEO). Global growth is now projected at 3.1 for 2013 ...
The International Monetary Fund has turned more gloomy about the state of the world economy.
The International Monetary Fund has turned more gloomy about the state of the world economy.
The global economy is growing more slowly than expected, with risks to that growth increasing especially in emerging markets, says the IMF in an update to its World Economic Outlook (WEO). Global growth is now projected at 3.1 for 2013 and 3.8 percent for 2014, a downward revision of ¼ percentage point each year compared with the forecasts in the April 2013 WEO.
Global growth increased only slightly in the first quarter of 2013, instead of accelerating further as expected at the time of the April 2013 WEO. The underperformance was due to continuing growth disappointments in major emerging market economies, a deeper recession in the euro area, and a slower U.S. expansion than expected. By contrast, growth was stronger than expected in Japan.
Not all the news is bad though. The Fund upped its forecast for growth in the United Kingdom, whose austerity policies it has criticized in the past. The British government is welcoming the news as a sign that its policy is working. Via the Guardian:
George Osborne will be cheered by the more upbeat outlook after suffering two years of brickbats from the IMF, which has lectured the government on taking a more expansionary stance and delaying public spending cuts. Yet growth of 1.5% next year could still be too weak to improve employment or spark a revival in manufacturing investment, which the chancellor believes is necessary for a more sustainable recovery.
A Treasury spokeswoman said: "The IMF has confirmed that the UK economy is moving from rescue to recovery, revising up its growth forecast for this year. But the IMF again warns of the continued risks to the global economy, showing that the recovery cannot be taken for granted."
For its part, the Fund believes that a change of course is still warranted:
IMF official Thomas Helbling said the main reason for the improved outlook was the data in the first quarter showing higher domestic demand.
"It is a small revision, nothing exceptional. The recovery is still weak and policyholders should still take measures to secure stronger growth," he said.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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