IMF sees a modest 2013 improvement

Print
Font Size:
Default font size
Larger font size

Posted: Thursday, January 24, 2013 12:00 am

WASHINGTON (AP) — The International Monetary Fund is projecting a modest rise in global economic growth for 2013, but also warning that problems in the eurozone and the United States could derail momentum.

The report Wednesday, an update of the fund’s World Economic Outlook, largely tracked the initial estimate from October, revising global growth down slightly by one-tenth of one percentage point, to 3.5 percent. The world economy grew 3.2 percent in 2012, according to IMF estimates.

“Some cautious optimism may indeed be justified,” said the IMF’s chief economist, Olivier Blanchard. “But we should be under no illusions: there remain considerable challenges ahead.”

The IMF downgraded its forecast for the 17-country eurozone, projecting a slight economic contraction for 2013. It said that despite positive policy steps to tackle the debt crisis in some eurozone countries, continued uncertainty about a resolution to the crisis is weighing down growth prospects.

The IMF warned that the eurozone “continues to pose a large downside risk to the global outlook.”

The revised report was more optimistic about the U.S. economy, forecast to grow by 2 percent for 2013. But prospects could change depending on impending tax-and-spending decisions. The U.S. government faces a series of budget negotiations as it tries to navigate mandated spending cuts and a dispute between President Barack Obama and lawmakers over the country’s borrowing authority.

The IMF warned that the U.S. should avoid sharp cuts in the short term, but improve its books over the medium term by cutting entitlements and passing tax changes.

The updated report projected that stimulus policies in Japan would pull that country out of a brief recession, but said Japan had to deal with its debt in the medium term. Growth in China is projected to be 8.2 percent in 2013 compared with 7.8 percent in 2012.

The IMF also noted that growth in developing economies could be hurt by the problems still facing the U.S., Europe and Japan.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


loading...

SPOTLIGHT »

Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.

World-Herald Alerts

Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.