WASHINGTON: The International Monetary Fund warned of stagnation in advanced economies as it trimmed its growth forecast for the whole world.
The global economy faces an increase in risks this year from the Russia-Ukraine crisis and strife in the Middle East, and the wider economic threat if the Ebola outbreak in West Africa is not contained. And it said that the deep wounds of the economic crisis that began in 2008 are “proving tougher to resolve”, especially in Europe.
“Given these increased risks, raising actual and potential growth must remain a priority,” the Fund said in its semi-annual World Economic Outlook report.
But it also said that the strength of advanced economies could be enhanced with much-needed investment in infrastructure, financed by the state. “Should the recovery stall, being ready to do more would be important,” it said.
The global crisis lender lowered its forecast for global growth this year to 3.3 percent, down 0.1 percentage point from July and 0.4 point less than it envisaged in April. The 2015 outlook has been cut to 3.8 percent growth, compared with 4 percent previously forecast. The overall projections appeared even less buoyant in the details. Last week IMF Managing Director Christine Lagarde stressed the danger of a “new mediocre” in economic expansion that does not generate more jobs for the unemployed. AFP
