IMF Cuts 2012 Growth Outlook to 3.3%, Calls for 'Mild Recession' in Europe
The International Monetary Fund Tuesday lowered its economic growth estimates for many countries due to growing financial strains and increasing downside risks based on Europe’s debt crisis.
Global economic output is now expected to grow by 3.3 percent in 2012, down from a previous forecast of 4 percent and 2011’s expected 3.8 percent growth. Global growth in 2010 came in at 5.2 percent. The IMF also reduced its 2013 worldwide growth forecast from 4.5 percent to 3.9 percent.
The IMF believes the 17-nation euro-zone economy will fall 0.5 percent in 2012, followed by growth of 0.8 percent growth in 2013. These figures are well below prior estimates of 2.1 percent and 1.5 percent growth, respectively, for the two years. The IMF anticipates rising sovereign bond yields and deleveraging by banks qill push the European Union into a “mild recession” this year.
The Fund sees U.S. growth of 1.8 percent in 2011 unchanged in 2012, and lowered the nation's 2013 forecast from 2.5 percent to 2.2 percent.
This year's growth in Japan is now expected at 1.6 percent, down from the previous IMF estimate of 2.0 percent.
The IMF reduced its 2012 outlook for China from 9 percent to 8.2 percent, and its 2013 outlook from 9.5 percent to 8.8 percent.
Amid news of the reduced estimates, stocks surprisingly bounced off session lows. The Dow Jones last traded down 41 points to 12,667, while the S&P 500 is down slightly more than 3 points. The Dow was trading around 12,623 as the IMF released the revised forecasts.
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Global economic output is now expected to grow by 3.3 percent in 2012, down from a previous forecast of 4 percent and 2011’s expected 3.8 percent growth. Global growth in 2010 came in at 5.2 percent. The IMF also reduced its 2013 worldwide growth forecast from 4.5 percent to 3.9 percent.
The IMF believes the 17-nation euro-zone economy will fall 0.5 percent in 2012, followed by growth of 0.8 percent growth in 2013. These figures are well below prior estimates of 2.1 percent and 1.5 percent growth, respectively, for the two years. The IMF anticipates rising sovereign bond yields and deleveraging by banks qill push the European Union into a “mild recession” this year.
The Fund sees U.S. growth of 1.8 percent in 2011 unchanged in 2012, and lowered the nation's 2013 forecast from 2.5 percent to 2.2 percent.
This year's growth in Japan is now expected at 1.6 percent, down from the previous IMF estimate of 2.0 percent.
The IMF reduced its 2012 outlook for China from 9 percent to 8.2 percent, and its 2013 outlook from 9.5 percent to 8.8 percent.
Amid news of the reduced estimates, stocks surprisingly bounced off session lows. The Dow Jones last traded down 41 points to 12,667, while the S&P 500 is down slightly more than 3 points. The Dow was trading around 12,623 as the IMF released the revised forecasts.
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