The Straits Times
Published on Jan 24, 2013

IMF trims global growth forecast, citing euro zone


WASHINGTON (AFP) - The global economy will grow slightly less in 2013 than was expected, held back by a weak euro zone that will stay mired in recession a second straight year, the International Monetary Fund (IMF) predicted on Wednesday.

"Downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the United States," the IMF said, in an economic outlook update.

The IMF projected global gross domestic product (GDP) annual growth of 3.5 per cent this year, a dip of 0.1 point from its October forecast, and 4.1 per cent in 2014.

Despite some progress in the euro zone's efforts to fight the public debt crisis, including a strengthened European Union-wide policy response, "the return to recovery after a protracted contraction is delayed", it said.