Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.
The IMF’s latest projections on the fate of the world economy are out: if you’re interested in 249 pages of “Transitions and Tensions,” which is this year’s theme, read the full report. The shorter version is that the world economy, the IMF writes, is in “low-gear”. The US is engaging in “excessive fiscal consolidation” (read: the sequester and shutdown); Japan’s economy is growing, but fiscal policy should tighten next year; and the Euro area is “tepid.” The Economist breaks the report down in interactive chart form. As Reuters notes, this is the sixth straight time in less than two years that the IMF has cut its global growth forecasts.
Neil Irwin sums up the report in four words: “Not good at all.” The IMF’s global growth projection for 2013 was revised down to 2.9% from 3.2% in July. US growth was also revised down to 2.6% from 2.7%, and Euro growth was revised up the same amount to 1%. Things look even worse in emerging markets: India’s growth projections were slashed by 1.8%, Mexico’s was cut 1.7%, and Russia’s was down 1%. Yesterday, the World Bank also cut its growth forecast for China and East Asia.
Martin Wolf has a good overview on the problems the world’s major economic blocs face: in high-income countries like the US, UK, and Japan, he writes, the big drag on growth is government spending cuts. Emerging economies, he adds, have to deal with a new world of higher interest rates, lower commodity prices, and a “structural slowdown” that’s happening “not least in China and India.” Earlier this week, Gavyn Davies suggested that stagnation in global trade may be partially to blame for the world’s economic slowdown.
Jeremy Warner points to a striking IMF chart which shows that it’s good to be on the outside of eurozone looking in: “virtually the entire eurozone is either in outright recession or showing growth of less than 1%.” The UK, for example, actually had its 2013 growth forecast raised to 1.4% from 0.9%.
The distinct lack of growth in the global economy isn’t likely to be the center of attention at the IMF’s meeting in Washington this weekend. Instead, the WSJ reports, America’s protracted, nauseating political gridlock will be the main focus. — Ryan McCarthy
On to today’s links: