By Li Hongmei
The International Monetary Fund (IMF) projected slower global growth for 2013 and 2014 in an update yesterday of its outlook three months ago, citing expectations of a more protracted recession in Europe and a slowdown in key developing countries such as China and Brazil.
The update of the IMF's World Economic Outlook issued in April now projects the world economy will grow at 3.1 percent this year, the same rate as last year and down from a forecast of 3.3 percent three months ago. The 2014 forecast was cut to 3.8 percent from 4.0 percent.
The IMF said new risks had emerged since April, including the possibility of a more drawn out slowdown in developing country economies.
Another potential drag on global growth is the possibility that the US will scale back its injections of cash to stimulate the economy in coming months. With markets already anticipating that, the IMF said some developing countries are already feeling the effects in the form of falling share prices and depreciating currencies.
A recession in the 17 countries that use the euro is shaping up to be deeper than expected, another factor pulling down the forecast, the IMF said. The eurozone may now contract by 0.6 percent this year, compared to the April forecast for a 0.4 percent decline.
The US economy also looks weaker than previously expected, the IMF said, citing tight fiscal and financial conditions.
IMF chief Christine Lagarde has been frequently criticizing the US for cutting government spending too much too fast. She has blasted the so-called sequester - across the board spending cuts instituted in March because Congress could not agree on a budget and debt deal.
The IMF cut forecasts for US growth to 1.7 percent in 2013, down from 1.9 in April, and to 2.7 percent for 2014 down from 2.9 percent. One reason cited was the sequester remaining in place until 2014, longer than previously projected.
China and Brazil, among the developing countries, saw significant downward revisions. China's 2013 forecast was cut to 7.8 percent compared to 8.1 in April. For 2014, it fell to 7.7 percent from 8.3 percent. Brazil was lowered to 2.5 percent in 2013 from 3.0 in April and 3.2 percent for 2014 compared to 4.0 percent previously.
Some developing economies in the Middle East and North Africa are weighed down by difficult political transitions, the report said.
Japan bucked the trend. The IMF revised its 2013 growth forecast up to 2.0 percent from 1.5 percent in April.
