IMF cuts world growth outlook amid worries over Ukraine

WASHINGTON (AFP) - The International Monetary Fund cut its growth forecast for the global economy on Tuesday, pointing to the threat from the Ukraine crisis and the slowdown in major emerging economies.

The IMF said the world's two largest economies, the United States and China, continue to anchor expected growth of 3.6 per cent this year and 3.9 per cent in 2015.

But those figures were rolled back by 0.1 percentage points from January's forecast, when the Fund was more optimistic before Ukraine plunged into crisis with an anti-government revolt and Russia's annexation of Crimea.

That has exacerbated Russia's sharp economic downturn, with the country facing economic sanctions from the West, and the Fund worries the impact could spread beyond the region.

Even so, the world's crisis lender said the global economy had improved since last year.

"The recovery which was starting to take hold in October is becoming not only stronger, but also broader," said chief Fund economist Olivier Blanchard.

"The various brakes that hampered growth are being slowly loosened. Fiscal consolidation is slowing, and investors are less worried about debt sustainability."

But the Fund said that sharp downturns in other leading emerging market economies, including Brazil, South Africa, and Turkey, were also drags on global output.

It said this "worrying development" was rooted in domestic policy shortcomings, tighter financial conditions both domestically and internationally, and a pullback in investment.

Those economies remain especially vulnerable from turbulence that started in the United States, where the Federal Reserve has commenced a plan to slowly tighten monetary conditions, spelling higher interest rates for the world and drawing capital away from riskier markets.

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