10/19/2012
The IMF's Latest World Economic Outlook
The International Monetary Fund (IMF) recently released its latest global outlook and with very few exceptions, estimates on growth across the board were ratcheted down.
New Projections
Advanced Economies 3.3% (2012) 3.6% (2013)
United States 2.2… 2.1
Euro Area
Germany 0.9… 0.9
France 0.1… 0.4
Italy -2.3… -0.7
Spain -1.5… -1.3
United Kingdom -0.4… 1.1
Canada 1.9… 2.0
Emerging Market and Developing Economies 5.3… 5.6
Central and Eastern Europe 2.0… 2.6
Russia 3.7… 3.8
China 7.8… 8.2
India 4.9… 6.0
Brazil 1.5… 4.0
Mexico 3.8… 3.5
From the Executive Summary of the IMF’s report:
“The global economy has deteriorated further since the release of the July 2012 WEO Update (World Economic Outlook), and growth projections have been marked down. Downside risks are now judged to be more elevated than in the April 2012 and September 2011 WEO reports. A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component. The answer depends on whether European and U.S. policymakers deal proactively with their major short-term economic challenges. The WEO forecast assumes that they do, and thus global activity is projected to reaccelerate in the course of 2012; if they do not, the forecast will likely be disappointed once again….
“Notwithstanding policy action aimed at resolving it, the euro area crisis has deepened and new interventions have been necessary to prevent matters from deteriorating rapidly….
“The unfolding euro area crisis has generated safe-haven flows to other jurisdictions, notably the United States and Japan. Although these flows have pushed government funding costs to historical lows, both countries continue to face significant fiscal challenges. In the United States, the looming fiscal cliff, the debt ceiling deadline, and the related uncertainty are the main immediate risks. Unsustainable debt dynamics remain the central medium-term concern. Japan faces high deficits and record debt levels, and interdependence between banks and the sovereign is growing….The key lesson of the past few years is that imbalances need to be addressed well before markets start flagging credit concerns.”
Source: imf.org
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Brian Trumbore
