Friday, February 3, 2012

IMF: Global Economic Recovery Stalls, Downside Risks Intensify

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International Monetary Fund: World Economic Outlook

International Monetary Fund (January 24, 2012) The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere. Financial conditions have deteriorated, growth prospects have dimmed, and downside risks have escalated. Global output is projected to expand by 3% percent in 2012 — a downward revision of about 3/4% percentage point relative to the September 2011 World Economic Outlook (WEO). This is largely because the euro area economy is now expected to go into a mild recession in 2012 as a result of the rise in sovereign yields, the effects of bank deleveraging on the real economy, and the impact of additional fiscal consolidation. Growth in emerging and developing economies is also expected to slow because of the worsening external environment and a weakening of internal demand.

Key Points:
■ Global recovery expected to stall, risks to intensify
■ Euro area expected to fall into mild recession, rest of world to slow
■ Comprehensive package needed to restore financial stability
■ Countries should avoid too rapid tightening of fiscal policy
■ Europe is epicenter, key to restoring confidence
■ Asia still strong
■ Financial sector risks rise
■ Progress on sovereign fiscal side

Actual and Projected GDPs by Year: World, USA, UK, Japan, Euro Area

Actual and Projected GDPs by Year: China, India, Brazil, World, Russia

Actual and Projected GDPs by Year: Developing Economies, World, Advanced Economies

IMF Marks Down Global Forecast, Sees Risk on Rise With intensifying strains in the euro area weighing on the global outlook, the International Monetary Fund has sharply cut its forecast for world growth this year. Speaker: Olivier Blanchard, Economic Counsellor, IMF.

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