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Global economy could stumble again - IMF

Global economy could stumble again - IMF
By Gift Chanda
Mon 20 June 2011, 16:50 CAT

THE IMF says recent trends in the world’s major economies are not reassuring and it is feared the global economy could stumble again.

In its recent global economic outlook report, the International Monetary Fund (IMF) said the recent cracks in the US and other advanced economies, whose growth is expected to be slow, posed a threat to the global economy.

It called for strong fiscal adjustments in advanced economies but cautioned against slashing programmes that stimulate economic growth.

It also said Europe should repair its banking system which it described as a key player in the global economic recovery from the recession.

“Strong adjustments - credible and balanced fiscal consolidation and financial sector repair and reform in many advanced economies, and prompter macroeconomic policy tightening and demand rebalancing in many emerging and developing economies - are critical for securing growth and job creation over the medium term,” the IMF stated in its report released over the weekend.

It revised downwards its global economic growth forecast for this year to 4.3 per cent, citing a slower-than-expected recovery of the US economy and Japan.
The IMF however, said countries in the sub-Saharan including Zambia would record positive economic growth.

But most of the southern African countries earlier growth projections remained unchanged.

According to the IMF, Zambia’s economy would increase to 6.8 per cent this year.

“Activity is slowing down temporarily, and downside risks have increased again…growth in many advanced economies is still weak. In addition, the mild slowdown observed in the second quarter of 2011 is not reassuring,” it said.

It said it expected the US economic growth in 2011 to slowdown to 2.5 per cent from the earlier projected 2.8 per cent.

The IMF also sees Japan’s economic growth coming down to 0.7 from 1.4 per cent in the aftermath of earthquake and Tsunami that hit that country.

“Overall, the global economy expanded at an annualised rate of 4.3 per cent in the first quarter…however, greater-than-anticipated weakness in US activity and renewed financial volatility from concerns about the depth of fiscal challenges in the euro area periphery pose greater downside risks,” it said.

“Risks also draw from persistent fiscal and financial sector imbalances in many advanced economies, while signs of overheating are becoming increasingly apparent in many emerging and developing economies.”

Labels: IMF, NEOLIBERALISM

posted by MrK @ 2:59 PM