WASHINGTON – The International Monetary Fund is projecting a modest uptick in global economic growth for 2013. But an IMF report released yesterday also warns that problems in the eurozone and the United States could derail momentum.
The report was an update of the fund's World Economic Outlook. It was largely consistent with the original report's estimate in October, revising global growth down slightly by a tenth of a percentage point to 3.5 per cent. The world economy grew 3.2 per cent in 2012, according to IMF estimates.
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 how the crisis would be resolved is weighing down growth prospects. The IMF warned that the eurozone "continues to pose a large downside risk to the global outlook."
The new report was more optimistic about the US economy. It forecasts two per cent growth for 2013, but said prospects could change depending on impending tax and spending decisions. The US government faces a series of budget negotiations as it tries to navigate mandated cuts and a dispute between President Barack Obama and lawmakers over its borrowing authority.
The IMF warned that the US should avoid sharp cuts in the short term, but improve its books over the medium term by cutting social programmes and passing tax reforms.
AP
