International Monetary Fund cuts forecasts for global expansion

WASHINGTON — Emerging economies have cooled off. Europe remains in the doldrums. The United States is facing fiscal uncertainty, and its powerful central bank is contemplating easing up on its extraordinary stimulus efforts, with potentially global ramifications.

As a result, global growth is in “low gear,” the International Monetary Fund said in its latest economic forecasts, released Tuesday as the world’s central bankers and finance ministers gather in Washington for the fund’s annual meetings.

The IMF, the Washington-based lending institution, cut its forecasts for global growth, as it has done in nine of its last 10 economic updates. It now foresees the world economy increasing by about 2.9 percent in 2013 and 3.6 percent in 2014. That is down from 5.4 percent in 2007, before the global recession hit.


More risks remain, like “prolonged sluggish growth,” which the IMF has indicated could translate into lower living standards and higher rates of joblessness for hundreds of millions around the world.

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“Quantitative indicators point to no major change to risks over the near term,” the IMF said. “The qualitative assessment is that uncertainty has increased again.”

Developed economies have strengthened whereas emerging economies have weakened, the fund said. The United States’ private sector has posted better numbers, and some European countries have stopped contracting, though growth in the continent remains weak.

“Growth is looking up, financial stability is returning, and fiscal accounts are looking healthier,” Christine Lagarde, the fund’s managing director, said of developed economies at a speech this month in Washington. “Nowhere is this clearer than the United States. We see it all around us,” she said, citing improvements in housing and household finances.

Yet growth in those wealthier countries remains anemic — just 1.6 percent in the United States and 1.4 percent in Britain, with a 0.4 percent contraction in the euro area. Financial problems in Europe continue to weigh down the rest of the world, the fund said.