I.M.F. Lowers World Growth Forecast

The fund brought its estimate for global growth down to 3.3 percent from 3.7 percent, and reduced its forecast for 2015 to 3.8 percent. The fund pointed to weaker growth in China, Europe, Japan and Latin America Brazil in particular as the main culprits behind the broad retrenchment.  By contrast, the outlook or the American economy, fresh off its very strong jobs report last week, was revised sharply upward, to 2.2 percent this year from 1.7 percent.  In an interview on Friday, Christine Lagarde, the managing director of the fund, said global growth risked being stuck in a rut for a long time. “If nothing gets done in a bold way, there is a risk of new mediocre” level of growth for the global economy, she said. “And that’s particularly clear now, because growth potential has already gone down.”Numerous countries, especially in Europe, have still not shed problems from the financial crisis and continue to face high government and household debt as well as persistent unemployment, Ms. Lagarde said. In addition, divergent monetary policies between the United States and Europe appeared likely to perpetuate a growth gap on both sides of the Atlantic, in which the American economy forged ahead while much of the Continent lagged behind.

via I.M.F. Lowers World Growth Forecast, Pointing to U.S. as a Bright Spot – NYTimes.com.

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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