The global economy is slowly improving again, but growth is expected to be weak, especially in Europe, according to the International Monetary Fund’s latest forecast.
The IMF in its most recent “World Economic Outlook” report released on April 17 forecasts global growth to drop from close to 4 percent in 2011 to about 3.5 percent this year, picking up to 4.1 percent next year.
“Real GDP growth should pick up gradually during 2012-13 from a trough seen in the first quarter of 2012, with signs of improvement in the United States, and the emerging economies remaining supportive,” the IMF said in a statement.
“For the past six months we’ve been on a rollercoaster ride,” said IMF chief economist Olivier Blanchard.
“Our baseline is that growth is going to be slow in advanced economies; sustained, but not great, in emerging market and developing economies. But the risk of things turning bad again in Europe is high,” said Christine Lagarde, IMF managing director.
The report highlighted the following regional prospects:
• North America. U.S. economic growth is projected at 2.1 percent in 2012 and 2.5 percent next year, reflecting ongoing fiscal consolidation and continued weakness in housing prices. In Canada, growth will moderate slightly to close to 2 percent.
• Asia. Weaker external demand has dimmed the outlook for Asia. Overall, growth in Asia will average 6 percent, with China slowing to 8.2 percent and India to 6.9 percent.
• Europe. Real GDP in the euro area is projected to contract in the first half of 2012 but then start recovering, except in Spain, Italy, Greece, and Portugal where recovery will only begin in 2013. Europe as a whole will see projected growth of 0.2 percent in 2012 and 1.4 percent next year.
• Latin America and the Caribbean. Growth is projected to moderate to 3.75 percent this year before recovering above 4 percent in 2013. Overall, the outlook for the region is promising.
• Middle East and North Africa. Overall growth for the region is forecast at 4.2 percent in 2012, with oil producers buoyed by continued high oil prices, but inflation will average 9.5 percent.
• Sub-Saharan Africa. The pace of growth is projected to pick up in 2012 to 5.4 percent, with the region relatively less exposed to the global slowdown but not immune to spillovers from the euro area’s problems.
Photo: IMF
