IMF Trims Its Global Growth Forecast

Citing Europe's continuing recession, the International Monetary Fund on Tuesday cut its estimate for global growth. The IMF also cut its forecast for the U.S. economy, predicting a growth rate of 1.9 percent.

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The International Monetary Fund has trimmed its forecast for global growth.

NPR's John Ydstie reports the outlook was adjusted downward, largely because so much of Europe is still in recession.

JOHN YDSTIE, BYLINE: The IMF projects the Euro area economy will shrink three-tenths of a percent this year, but return to positive growth next year.

Meanwhile, the IMF forecast, called the World Economic Outlook, predicts the U.S. will grow just under two percent this year and around three percent in 2014.

U.S. growth is somewhat slower than expected, due to the drag from the immediate budget cuts under the sequester.

Even with that added drag, the U.S. is performing better than most other large advanced economies, but the IMF's top economist, Olivier Blanchard, says risks remain.

OLIVIER BLANCHARD: Recent good news about the U.S. has come with renewed worries about the euro area. Given the strong interconnections between countries, an uneven recovery is also a dangerous one.

YDSTIE: Growth prospects for one advanced economy - Japan - are looking better after a huge dose of stimulus from the government and the central bank in recent weeks.

Also, on the plus side, the emerging economies of China, India and Brazil are doing well - with higher growth rates than in 2012.

Overall, the IMF predicts the world economy will expand at a 3.3 percent annual rate this year, slightly faster than it did last year.

John Ydstie, NPR News, Washington.

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