I.M.F. Lowers Estimates for Global Economic Growth for 2013

[WestVirginiaRebel]

NY Times:

WASHINGTON — With economic leaders gathering in Washington for the World Bank and International Monetary Fund spring meetings this week, the I.M.F. has nudged down its estimates for world growth in 2013.

In a periodic update to its economic projections, the fund said on Tuesday that it expected global growth of about 3.3 percent this year and 4 percent in 2014. That is a reduction of 0.2 percentage point since its January estimate for 2013; it did not change its estimate for next year’s growth.

Still, the report underscored that financial conditions had improved markedly since last year, in no small part because of aggressive monetary easing undertaken by the Federal Reserve, the Bank of Japan and the European Central Bank.

Recession continues to afflict Europe, and the world still struggles with high unemployment, but the greatest risks — in particular from the threat of a country’s leaving the euro zone and from fiscal policy uncertainty in the United States — have faded.

“Global prospects have improved again but the road to recovery in the advanced economies will remain bumpy,” said the report, called the World Economic Outlook. “Policy makers cannot afford to relax their efforts.”

The fund cut its projections of current-year growth for the euro zone economies of France, Italy and Spain, as well as for Britain, which has also carried out austerity policies and entered a period of economic contraction. I.M.F. officials have urged stronger European economies with lower borrowing costs, like Germany, to do more to foster growth across the entire region and to move more aggressively to finish a cross-border banking union to shore up investor confidence. The fund and many international economic officials, including Treasury Secretary Jacob J. Lew, are expected to press Europe on its plans for growth again this week.

“Policy should use all prudent measures to support sluggish demand,” the report said. “However, the risks related to high sovereign debt limit the fiscal policy room to maneuver. There is no silver bullet to address all the concerns about demand and debt.”

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Europe becomes its own Sick Man.