IMF cuts global growth outlook again

WASHINGTON — The International Monetary Fund (IMF) yesterday lowered its global economic forecasts for the third time this year, warning of weaker growth in core eurozone countries and Japan.

In its flagship World Economic Outlook report, the Washington-based body cut its expectations for global growth to 3.3 per cent this year and 3.8 per cent next year. The IMF in July had expected economic growth of 3.4 per cent this year and 4 per cent in 2015.

The organisation has now cut its current-year growth forecasts nine out of 12 times in the past three years as it consistently overestimated how quickly richer countries would be able to pull free from high debt and unemployment in the wake of the global financial crisis of 2007 to 2009.

The IMF urged countries to carry out structural reforms to support the recovery — or risk stagnation. It added that it was essential that the major economies maintain monetary accommodation and low interest rates.

The gloomy projections set the stage for this weekend’s annual joint meetings of the IMF and World Bank in Washington, where top policymakers will discuss how to deal with a flagging global economy as the United States gets ready to end its quantitative easing policies.

While richer countries such as the US and the United Kingdom are recovering well, the IMF downgraded its forecasts for the eurozone amid weakness in Germany, France and Italy. The global lending organisation expects the US to grow 2.2 per cent this year, up from an earlier forecast of 1.7 per cent. Its forecast for 3.1 per cent growth in the world’s largest economy next year was unchanged.

The IMF forecasts that growth in the eurozone will be only 0.8 per cent this year, down from 1.1 per cent it predicted in July. It lowered its 2015 projection to 1.3 per cent from 1.5 per cent.

Japan is expected to grow only 0.9 per cent this year, down from the 1.6 per cent pace the IMF previously projected. The IMF sees Japan’s growth slipping to 0.8 per cent next year, down from its July estimate of 1 per cent.

The IMF left its forecasts for China unchanged at 7.4 per cent this year and 7.1 per cent in 2015. While those figures would be healthy for most nations, they represent the slowest growth in decades for China, the world’s second-largest economy. AGENCIES