Dire Warning: Risk of Global Recession Is Alarmingly High

IMF says global economic slowdown is getting worse

   

Dire Warning: Risk of Global Recession Is Alarmingly High

The International Monetary Fund is warning that the risk of another global recession is high, and gave its worst assessment of growth prospects since the end of the 2009 recession.

The IMF says in its World Outlook Report that it expects global growth to reach 3.3% for 2012 and just 3.6% in 2013 — that’s a revision downward by approximately 0.2 percentage points for 2012 and 0.3 points for 2013, The Wall Street Journal reports. Slowing is predicted for nearly every nation and is hampered by the political situations in the United States and the eurozone.

The IMF’s advice for mitigating or preventing the predicted slowdown is mixed, with some countries being advised to cut budgets and others being told that complete economic overhauls are necessary. A few, including Germany and the Netherlands, are even advised to allow a greater inflation rate to allow for more competitiveness for other eurozone nations.

In the report, the IMF predicts a 17% chance that global economic growth falls below 2% for 2013. That’s the level the IMF uses for a recession.

Even this grim forecast could be worse. The IMFs current prediction rests on two assumptions. First, that the eurozone finds a way to ease itself out of its current hardships, and second, that the United States government manages to avoid the planned “fiscal cliff.” Should either of those events fail to pass, things could look even bleaker.

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Article printed from InvestorPlace Media, http://investorplace.com/2012/10/dire-warning-risk-of-global-recession-is-alarmingly-high/.

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