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IMF cuts global growth forecast

  • The International Monetary Fund (IMF) cut its global growth forecast on Tuesday for the second time since April and warned U.S. and European leaders that failure to address their economic woes would delay recovery.

    Global growth is too weak to lower unemployment and what little momentum exists comes primarily from central banks, the IMF said in its World Economic Outlook, released ahead of its bi-annual meeting, which will be held in Tokyo later this week.

    "A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component," it said.

    "The answer depends on whether European and U.S. policymakers deal proactively with their major short-term economic challenges."

    The IMF now expects global output to grow just 3.3 percent for 2012, down from its July estimate of 3.5 percent.

    It predicted only a modest pickup next year to 3.6 percent, below its July estimate of 3.9 percent.

    Emerging markets are still expected to grow four times as fast as developed economies.

    However, the IMF slashed estimates for India and Brazil, with the latter predicted to grow slower than the United States this year.