IMF reduced its growth estimate for the global economy in 2013 by 0.1 percentage points to 3.4%. The main reason is the delayed recovery in the eurozone, reports MarketWatch. For 2012, the IMF expected a growth of 3.2% worldwide. In an update to its World Economic Outlook report, the IMF reduced its growth estimates for almost all countries, compared to data published in October.
Changes are significant for Europe. For the old continent, the IMF anticipates the eurozone economy to contract by 0.2% this year, up from previous estimates, which called for an advance of 0.2%. This would mean two consecutive years of contraction.
Activities in the periphery of the eurozone were below expectations and affected countries of Central region, namely Germany and France, the report said, according to which uncertainty about the evolution of the debt crisis is still high despite progress in recent years.
IMF forecasts that the German economy this year will record a growth of 0.6% compared to the previous estimate of 0.9%. For France the estimate was reduced by 0.1 points to 0.3%. The International Monetary Fund expects Italy’s economy to contract by 0.1%, the estimate is cut by 0.3 points, while Spain’s economy is expected to decline by 1.5%, 0.1 points higher than the October estimate.
Regarding the U.S., IMF lowered growth forecast for this year from 2.1% to 2%, stating that “the priority is to avoid excessive fiscal consolidation in the short term, promptly raise the debt ceiling, and agree on a credible medium-term fiscal consolidation plan, focused on entitlement and tax reform.”
In Central and Eastern Europe, the economy will grow this year by 2.4%, 0.1 points below the rate expected in October. In the case of Japan, the Fund maintained its forecast to 1.2%.
The IMF considers that the risks to the outlook of the global economy are still significant, among them it mentioned possible new problems in the euro area and potential excessive budget cuts in the United States.
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