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Hampered global growth

July 6, 2012

The International Monetary Fund (IMF) has said global economic growth was slowing alarmingly. It warned it would have to revise down its growth prospects as expectations three months ago had not been met.

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IMF Managing Director Christine Lagarde gestures during her speech at a forum for the annual meetings of the IMF in Tokyo
Image: dapd

International Monetary Fund Chief Christine Lagarde on Friday cautioned that the global economy was slowing further in contrast to the IMF's earlier predictions. She said the financial institution's next forecast on July 16 would contain some disconcerting figures about the state the global economy was in.

"Growth will be tilted to the downside and certainly lower than the forecast we published three months ago," Lagarde told an economic forum in Tokyo during her week-long tour of Asia.

In April, the IMF surprisingly hiked its global growth forecast to an annual rate of 3.5 percent throughout the current year, accelerating to 4.1 percent in 2013. But Lagarde made it clear these targets now looked hard to achieve.

Praise for eurozone leaders

The IMF conceded growth prospects would be even worse without the most recent incentives to keep the eurozone debt crisis at bay.

Lagarde hailed the first timid moves towards a banking union as made during a European leaders' summit in Brussels last week. "But more needs to be done in order to complete the necessary reforms," she said in Tokyo. "It's also a question of implementation - diligent, rigorous, steady implementation," Lagarde added.

The IMF chief also welcomed Thursday's decision by the European Central Bank (ECB) to cut its refinancing rate to a historic low of 0.75 percent as yet another effort to prevent a credit crunch in the euro area.

hg/mz (Reuters, AFP)