IMF cuts global growth outlook; India avoids ratings downgrade
IMF warned that only some of the factors leading to the reduction were temporary
Mumbai: The International Monetary Fund on Thursday chopped its 2014 forecast for global economic growth to take into account weakness early in the year in the United States and China, the world's two biggest economies.
The IMF warned that only some of the factors leading to the reduction were temporary, and richer nations in particular faced the risk of economic stagnation unless they took steps to foster sustainable growth.
In an update to its World Economic Outlook report, the IMF said the global economy should expand 3.4% this year, 0.3 percentage points below what it predicted in April. Growth should still speed up to 4% next year, it said, unchanged from what it predicted earlier this year.
But the Fund said a robust global recovery from the deep financial troubles of 2007-09 was still not assured, and geopolitical risks from the crises in the Middle East and Ukraine could dent growth further.
"Robust demand momentum has not yet emerged despite continued very low interest rates and easing of brakes to the recovery, including from fiscal consolidation or tight financial conditions," the IMF said, adding that all major advanced economies would do well to keep policy rates low for now.
Central banks in the United States, Japan, the euro zone and Britain have all sharply lowered rates to boost economic growth and pledged to keep them there for longer to let the recovery take hold.