IMF warns of 'mild recession'

Jan. 24, 2012 at 4:34 PM
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WASHINGTON, Jan. 24 (UPI) -- The International Monetary Fund in Washington lowered its projection for global economic growth for 2012, warning of a "mild recession" in the eurozone.

The IMF's World Economic Outlook report said "the euro area would fall into a mild recession in 2012 after the euro area crisis entered a 'perilous new phase' toward the end of last year."

"The outlook for growth is mediocre, and it could be worse," said Oliver Blanchard, IMF's economic counselor.

"The epicenter of the danger is Europe, but the rest of the world is increasingly affected."

The report said "Asia is still strong." Emerging economies are expected to average 5.75 percent growth in 2012-13, which is a substantial drop from 6.75 percent growth registered in 2010-11, the report said.

The IMF estimates global economic growth at 3.3 percent in 2012 and 3.9 percent in 2013. These are drops of 0.7 and 0.6 percentage points lower than the report's September projections.

The gross domestic product in the United States is expected to rise 1.8 percent in 2012 and 2.2 percent in 2013. In Germany, growth is expected to be a slim 0.3 percent in 2012 and 1.5 percent in 2013.

Brazil is expected to see growth of 3 percent and 4 percent, respectively, while China in 2012 and 2013 is expected to see growth of 8.2 percent and 8.8 percent.

A few areas are expected to see stronger growth now than in the IMF's previous forecast. In South Africa, negative growth has been reassigned projections of 2.5 percent for 2012 and 3.4 percent for 2013. Central and Eastern Europe are expected to see growth at 1.1 percent and 2.4 percent, rather than the declines predicted in the fall.

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