IMF say global economy healthier, but still weak

Tue Oct 8, 2013 5:25pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Anna Yukhananov

WASHINGTON (Reuters) - The International Monetary Fund expressed guarded optimism about the state of the global economy on Tuesday, even as it trimmed its forecasts for output and warned about the catastrophic impact of a potential U.S. debt default.

In its latest global economic snapshot, the IMF cut its world growth forecasts for the sixth straight time in less than two years, saying a stronger performance in most advanced economies would fail to make up for a more sluggish expansion in the developing world.

Prospects for emerging markets, long the engine of the global recovery, have dimmed somewhat with both structural and cyclical factors at play, the IMF said.

The IMF now expects global output to expand just 2.9 percent this year, down from its July estimate of 3.1 percent, making it the slowest year of growth since 2009. It sees a modest pickup next year to 3.6 percent.

"Although the global growth number is not impressive, I think the news on net is rather good. Those countries which were sick are less sick than they were," the IMF's chief economist Olivier Blanchard told reporters, referring to rich nations.

"And the others are slowing down, but I wouldn't call this sickness," he said in a reference to emerging markets.

The United States is driving much of the global recovery and U.S. output should pick up further next year - as long as politics do not get in the way, the IMF said.

Blanchard warned that a failure by the U.S. Congress to quickly raise the nation's $16.7 trillion debt ceiling could tip the world's largest economy into a deep downturn that would be felt around the globe.   Continued...

 
People walk outside the International Monetary Fund headquarters at the start of the annual IMF-World Bank fall meetings in Washington, October 8, 2013. REUTERS/Jonathan Ernst