By Ivan Angelov | NewEurope
A few hours before its annual meeting in Tokyo, the International Monetary Fund (IMF) published a report on the projected growth of the global economy in 2012, and the revised figures are far from optimistic.
For this year, there was provided an increase of 3.3%, which is 0.2% less than the previous published results. In 2013, the IMF reduced the rate of the projected growth of 3.9% to a far more realistic 3.6%. However, it is clear that this figure has to be revised as well.
The report provided a slight slowdown in the pace of economic growth in countries with developing economies – especially China, Brazil and India – which is partly explained by the euro zone crisis. The evaluation of IMF noted that such threat hangs not only over China, but also over Japan, as the government incentives in the two largest
Asian economies have not given the expected boost. The IMF expected the unfavourable global trend towards increased levels of unemployment to remain.
The financial crisis in Europe was determined as the most distinct threat to the economic stability on a global scale. In this context, attention was paid to the euro zone crisis. The IMF expected the recession in the euro area this year to lead to a contraction in GDP of 0.4%. The report stated that despite the intense political dialogue and progress of European leaders, in the second and third quarter the economic indicators have deteriorated.
The report emphasized the need for concrete actions that governments in Europe and the U.S. should take in the name of global economic stability.
For Europe, it was recommended to accelerate the emergency measures within the EU and the euro area, to finalize the idea for banking union and greater fiscal integration. The IMF warned that the policy of the ECB to buy back government bonds could only have “ephemeral effect”.
The criticism to the United States was expressed in the dangerous cutting of public spending and raising the tax rates that threatened “the American economy to sink back into recession with catastrophic consequences for the rest of the world”.
The document noted that there was a limited risk the economies of Central and Eastern Europe to be seriously affected from eventual deepening of the crisis in the Eurozone.