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IMF to cut global growth estimates

September 25, 2012

WASHINGTON, Sept 24: The International Monetary Fund is likely to lower its growth estimates for the global economy when they are published next month, the IMF chief Christine Lagarde said on Monday.

“We continue to project a gradual recovery, but global growth will likely be a bit weaker than we had anticipated even in July,” Lagarde said in a speech, according to the prepared text.

The IMF is slated to release its latest global growth forecasts on October 9 at an annual meeting with the World Bank in Tokyo, Japan. In July, the Washington-based global lender projected global growth of 3.5 per cent in 2012 and 3.9 per cent in 2013.

“Our forecast has trended downward over the last 12 months,” Lagarde said, underscoring that the global economy “is still fraught with uncertainty” after the global recession.

The IMF managing director issued a clear call for action to fight the weakening global economy.

“My main message today,” she told a Washington think-tank, is “the urgent need to implement the policy actions required to secure the global recovery.” Lagarde said that “Europe obviously remains the epicentre of the crisis and where the most urgent action is needed.” She pointed to an urgent need for a eurozone banking union.

“We continue to believe it should be initiated as soon as possible — to break the vicious cycle between banks and sovereigns,” she said. Lagarde’s remarks came after the leaders of Germany and France clashed on Saturday over plans to tighten the checks on Europe’s banks.

In June, the European Union leaders agreed the new bank supervision system as part of a deal to allow the bloc’s rescue funds to lend directly to stricken banks instead of funnelling aid through member countries, and thus adding to their debt woes.—AFP