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The IMFâ€™s latest projections on the fate of the world economy are out: if youâ€™re interested in 249 pages of â€śTransitions and Tensions,â€ť which is this yearâ€™s theme, read the full report. The shorter version is that the world economy, the IMF writes, is in â€ślow-gearâ€ť. The US is engaging in â€śexcessive fiscal consolidationâ€ť (read: the sequester and shutdown); Japanâ€™s economy is growing, but fiscal policy should tighten next year; and the Euro area is â€śtepid.â€ť 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: â€śNot good at all.â€ť The IMFâ€™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: Indiaâ€™s growth projections were slashed by 1.8%, Mexicoâ€™s was cut 1.7%, and Russiaâ€™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 worldâ€™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 â€śstructural slowdownâ€ť thatâ€™s happening â€śnot least in China and India.â€ť Earlier this week, Gavyn Davies suggested that stagnation in global trade may be partially to blame for the worldâ€™s economic slowdown.
Jeremy Warner points to a striking IMF chart which shows that itâ€™s good to be on the outside of eurozone looking in: â€śvirtually the entire eurozone is either in outright recession or showing growth of less than 1%.â€ť 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 isnâ€™t likely to be the center of attention at the IMFâ€™s meeting in Washington this weekend. Instead, the WSJ reports, Americaâ€™s protracted, nauseating political gridlock will be the main focus. — Ryan McCarthy
On to todayâ€™s links: