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IMF projects slower growth for 2013

July 9, 2013 at 2:58 PM   |   Comments

WASHINGTON, July 9 (UPI) -- The International Monetary Fund in Washington on Tuesday said economic growth prospects for 2013 had weakened since April.

In the group's World Economic Outlook report, the IMF said global economic growth in 2013 would be slightly above 3 percent, dropping its growth predictions due to "weaker domestic demand and slower growth in several key emerging market economies."

The IMF said risks to growth had increased since April, when it published its last World Economic Outlook report.

"While old risks remain, new risks have emerged," the report said naming slower growth in emerging economies, slowing credit "and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the United States leads to sustained capital flow reversals."

Although stock markets in the United States and Japan have soared in recent months, the IMF noted increased market volatility that "increased globally in May and June after a period of calm since last summer."

The IMF also called attention to widening spreads in government bond yields, which are affecting "peripheral euro area" economies.

"Emerging market economies have generally been hit hardest," the IMF said, as wilder swings in stock markets "combined with weaker domestic activity," have prompted investors to withdraw funds from emerging markets, the IMF said.

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