IMF cuts 2012 global growth forecast on likely eurozone recession

24 January 2012 22:02  [Source: ICIS news]

HOUSTON (ICIS)--The International Monetary Fund (IMF) cut its growth forecast for the global economy because it expects the eurozone will fall into a minor recession, it said on Tuesday.

The IMF expects the world economy to grow by 3.3%, down from its earlier estimate of 4.0% made in September, it said in an update to its World Economic Outlook.

The IMF lowered its estimate because it now expects the eurozone's economy to shrink by 0.5% in 2012, down 1.6 percentage points from its September forecast of growing by 1.1%.

The IMF expects the Italian and Spanish economies will shrink this year, compared with earlier estimates of growth. The IMF still expects Germany and France to grow, although at slower rates.

“The outlook for growth is mediocre, and it could be worse,” according to a statement by Olivier Blanchard, the IMF’s economic counsellor.

“The world recovery, which was weak in the first place, is in danger of stalling," Blanchard said. "The epicentre of the danger is Europe, but the rest of the world is increasingly affected.”

The US should grow by 1.8%, unchanged from the IMF's September estimate.

China should grow by 8.2%, down by 0.8 percentage point from the September estimate. Japan should grow by 1.7%, down by 0.6 percentage point from September.

India should grow by 7.0%, down by 0.5 percentage point from September.

Latin America and the Caribbean should grow by 3.6%, down by 0.4 percentage point from September.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Al Greenwood
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