IMF cuts global cut forecast

The International Monetary Fund has cut its global growth forecasts for this year and 2013 and called on politicians in the eurozone and the US to take "decisive" steps to restore confidence, a media report said today.

Citing excerpts from the IMF's World Economic Outlook to be released early next week, the Handelsblatt business daily said that the Washington-based body predicted world economic growth of 3.3 per cent in 2012 and 3.6 per cent in 2013.

In July, the IMF issued forecasts of 3.5 per cent and 3.9 per cent, respectively.

The German-language paper quoted the report as saying that the "further cooling of growth in the world economy this year and next goes along with a clear increase in downward risks."

The forecast depends in particular on "whether decisive political steps are taken in the eurozone and the US to stabilise confidence," the paper quoted the report as saying.

The IMF forecasts a shrinking of the eurozone economy of 0.4 per cent this year and a small positive growth of 0.2 per cent in 2013, according to NDTV Profit.

The IMF cut its forecast for China to 8.2 per cent, for India to six percent and for Brazil to four percent, according to Handelsblatt.

The fund also saw a "further drop in inflation" given the sluggish global economic output and recommended additional cuts in interest rates to stimulate activity.