IMF cuts forecast for global economic growth

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The International Monetary Fund (IMF) presented its latest World Economic Outlook today, Tuesday 7 October, and warned economic recovery was ‘weak and uneven’.

It now forecasts a 3.3% growth this year, down from its previous forecast of 3.4%, and a 3.8% growth next year, down from 4.0%. This reflects sharp downgrades to the Eurozone, Japan, Russia and the Middle East.

However, the outlook in the UK remains positive, with the UK maintaining the IMF’s July forecast of 3.2% growth this year and 2.7% next year.

IMF’s chief economist Oliver Blanchard said:

“Among advanced countries the United States and the United Kingdom in particular are leaving the financial crisis behind and achieving decent growth. Even for them however, potential growth is lower than it was in the early 2000s.”

However in the Eurozone, Blanchard said growth had nearly stalled earlier in the year. It has also cut its forecast for emerging market economies, where, as a whole, potential growth is forecast to be 1.5% lower than it was in 2011.

Responding to the press conference, George Osborne tweeted: “IMF today expect UK to have fastest growing G7 economy this year. But IMF also point to rising global risks, showing job is not done.”