IMF Downgrades Global Growth for 2013

The International Monetary Fund (or the IMF) issues guidance on global and country-specific economic expectations from time to time, but we now have the IMF’s 2013 World Economic Outlook for the globe and for regions.

The big issue this morning is that the IMF is lowering some growth forecasts, even on the heels of what has been a major market rally since the first of the year. Today’s downgrade represents a slight global growth target reduction based on a protracted recession in Europe.

The euro area is now expected to contract by -0.2% rather than what was previously expected to be only marginal growth (recovery) of 0.2%, projected back in October for 2013. U.S. growth has been downgraded marginally to 2.0% for 2013. A caveat is that downside risks remain, based on new setbacks in the euro area and risks of financial consolidation in the United States. The IMF said that policy actions must address these risks. Elsewhere:

  • Emerging market growth in 2013 has been trimmed by 0.1% to 5.5%
  • Latin American growth is put at 3.6% for 2013.
  • Canada’s growth expectations were trimmed marginally to 1.8% for 2013.

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