The International Monetary Fund has warned that the risks facing the world economy have increased.<\/p>\n
The fund said it was concerned about the continuing Greek debt crisis, the arguments over US deficit plans and the need to curb growth in Asia.<\/p>\n
But it said it expected global growth to remain on track, though it lowered its forecasts for the US and UK.<\/p>\n
The IMF predicted that the world economy would grow at a rate of 4.3% in 2011 and 4.5% in 2012.<\/p>\n
The fund called for greater political leadership in dealing with the eurozone debt crisis and the budget crisis in the US.<\/p>\n
“You cannot afford to have a world economy where these important decisions are postponed, because you’re really playing with fire,” said Jose Vinals, director of the IMF monetary and capital markets department.<\/p>\n
The IMF’s latest forecasts came as it updated its assessments of financial stability, country finances and the global economy. Its last review was in April.<\/p>\n
Greek debt<\/p>\n
The fund warned that the continuing Greek debt crisis could destabilise the global financial system.<\/p>\n
Many analysts believe Greece will not be able to pay back all the money it has borrowed.<\/p>\n
“I don’t think there is a question over whether Greece is going to default, it is just a question of whether it is an orderly or disorderly one,” says George Magnus, senior economic adviser at UBS.<\/p>\n
The IMF warned that if Greece was unable to pay its debts, other countries such as Spain or Portugal may also be affected.<\/p>\n
European banks which lent money to these countries would in turn lose out.<\/p>\n
“In a serious market event, a shock could be transmitted beyond the eurozone”, warned the IMF’s financial stability report.<\/p>\n
It called on the leaders of European governments to implement long-term policies to prevent further problems.<\/p>\n
At the same time, the IMF warned that European banks had not yet built up sufficient capital to withstand a further economic shock.<\/p>\n
“Markets may become disorderly if political developments derail momentum on fiscal consolidation and financial repair,” the fund warned.<\/p>\n
US and Japan<\/p>\n
The IMF also highlighted debt problems outside the eurozone.<\/p>\n
Federal Reserve chief Ben Bernanke has called on US lawmakers to raise the debt ceiling<\/p>\n
Japan is struggling to cut its spending in the aftermath of the earthquake and tsunami.<\/p>\n
In the US, the fund highlighted the “political stalemate” over how to tackle the deficit.<\/p>\n
The fund lowered its growth forecasts for the US for the next two years from 2.7% to 2.5% in 2011 and from 2.9% to 2.7% in 2012, and it also highlighted renewed weakness in the housing market as a risk.<\/p>\n
Economic growth<\/p>\n
In the so-called “core” European countries, such as France and Germany, growth has exceeded expectations.<\/p>\n
The IMF raised its 2011 growth forecast for Germany to 3.2% from 2.5%.<\/p>\n
This may help to mitigate some of the problems faced by other countries in the eurozone.<\/p>\n
The fund pushed up its 2011 forecast for the eurozone as a whole to 2% from 1.6%.<\/p>\n
There are worries the Chinese property market may be overheating<\/p>\n
In the UK, the fund downgraded its growth forecast for 2011 to 1.5% from 1.7%.<\/p>\n
However, it endorsed efforts to cut the deficit, describing the plans as “on track”.<\/p>\n
Outside Europe, the fund said it expected economic growth in developing countries to remain strong.<\/p>\n
This, in turn, presents a risk of overheating – where economies grow too fast leading to a rapid contraction later.<\/p>\n
“Too much capital may be moving too quickly to emerging markets,” the IMF warned, pointing to higher inflation in some countries.<\/p>\n
Property prices in China have also risen sharply posing the risk of a sharp downturn.<\/p>\n
The three IMF reports highlight the uncertainty over the economic outlook<\/p>\n
UBS’s Mr Magnus said: “The standard [IMF] economic forecast is based on all sorts of assumptions, but that is the point. We are being treated to a succession of random and extreme events, which are difficult to predict.”<\/p>\n
Stay with Sierra Express Media, for your trusted place in news!<\/strong><\/em><\/p>\n The International Monetary Fund has warned that the risks facing the world economy have increased. The fund said it was concerned about the continuing Greek […]<\/p>\n","protected":false},"author":1,"featured_media":75801,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[751,1],"tags":[3859,8875],"class_list":["post-25286","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-news","category-uncategorized","tag-imf","tag-world-economy"],"_links":{"self":[{"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=\/wp\/v2\/posts\/25286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=25286"}],"version-history":[{"count":0,"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=\/wp\/v2\/posts\/25286\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=\/wp\/v2\/media\/75801"}],"wp:attachment":[{"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25286"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25286"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sierraexpressmedia.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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