IMF says Global economic uncertain and suffers setbacks

Vinutha Raju | October 19,2012 02:03 pm IST

IMF has reduced Indias growth projection to 4.9% for 2012 from its earlier estimate of 6.

The global economic recovery is weakening as government policies have failed to restore confidence, the International Monetary Fund has said.

IMF has laid the blame of sluggish growth of Indian economy on political uncertainties and bureaucratic ineffectiveness, waning business confidence amid slow approvals for new projects, in its World Economic Outlook released on Tuesday.

The report also reduced the world output growth by 0.2 percentage point to 3.3% for 2012. For China, the economic growth projection has been reduced by 0.2 percentage point to 7.8% for the same year.

The fund's forecast for global growth this year has been lowered to 3.3% from 3.5%. and for 2013 it has downgraded to 3.6% from the 3.9% it forecast in July. It added that the risk of further deterioration in the economic outlook was 'considerable' and had increased.

Olivier Blanchard, the IMF's chief economist, said the slowdown was being led by problems within the developed countries: 'Low growth in advanced economies is affecting emerging and developing economies through exports.'

The IMF's report said that overall, '[economic] output is expected to remain sluggish in advanced economies but still relatively solid in many emerging markets and developing economies'.

It said much would depend on action taken by policymakers in Europe and the US.

IMF annual growth forecasts (% change)   
                                        Latest forecasts        Previous forecasts (July)   
                                            2012      2013               2012         2013   
World output                       3.3          3.6                 3.5              3.9   
Euro area                           -0.4          0.2                -0.3              0.7   
US                                        2.2          2.1                 2.0              2.3   
Japan                                   2.2          1.2                 2.4              1.5   
UK                                       -0.4          1.1                 0.2              1.4   
China                                   7.8           8.2                 8.0              8.5   
Brazil                                    1.5          4.0                 2.5              4.6   
India                                    4.9           6.0                 6.1              6.5   
Russia                                  3.7           3.8                 4.0              3.9 

Source: IMF World Economic Outlook
The IMF report is 200 page document and has 2-page summary which sums up the report. Visit the following link for complete report...






Vinutha Raju has over 18 years of experience in investments, financial research & analysis and worked as Vice President-Investments with a mid-sized private equity fund. She was on the board of directors in the invested companies. She is a member of board of studies for setting  of syllabi for finanace courses in MBA colleges. She has a...