Sluggish global recovery shows signs of further weakness: IMFListen /
The already sluggish global economy is showing signs of further weakness, according to the International Monetary Fund (IMF), which blames the Eurozone crisis and slower than expected growth in emerging economies.
The IMF's World Economic Outlook Update projects the global economy will grow 3.5 percent this year, which is down 0.1 percentage points from the April forecast. As for next year, the revised growth projection is for 3.9 percent, marginally lower than earlier forecasts.
IMF chief economist Olivier Blanchard says further policy action is needed to offset this including centralizing the regulation of European banks, expanding the use of the region’s bailout funds and raising the borrowing limit of the United States.
"If you take one step back, it’s a very weak recovery. And the rate of growth world output which is 3.5 percent this year we think, is very low. It’s the lowest one if you forget 2009, for the last ten years. And then if you look across countries, in the U.S. we forecast two percent. That’s barely enough to decrease unemployment. In Europe we have negative growth this year, positive growth but small next year. Emerging market countries down from fairly high rates in the 2000′s to low rates now. So weak recoveries: point number one, and point number two: this is the baseline. And unfortunately, when we look we see very large downside risks."