The International Monetary Fund has lowered its forecast for world economic growth in a generally glum report which states that downside risks dominate growth prospects.
And like a doctor recommending diet and exercise to a patient more accustomed to binge snacking and chronic inactivity, the Washington-based institution also put in a muted good word for structural reform in its quarterly World Economic Outlook, released this week.
The IMF forecasts global growth of 3.1% in 2013, a downward revision from its April forecast of 3.3%, and its 3.8% projection for 2014 is also lower than its April 4% forecast.
The 188-nation organization says slow growth in the U.S. and deceleration in emerging markets—the world’s former economic engines — and a deeper-than-expected recession in the euro area leading to “depressed confidence” — are the primary causes of the world’s underperformance.
The U.S. economy this year is projected to grow at a 1.7% rate, lower than last year’s 2.2% rate, but fueled by rising household wealth resulting from the U.S. housing recovery, the IMF forecasts 2.7% growth next year.
Japan’s easy-money-fueled economy is expected to grow at a 2% rate this year, falling to 1.2% next year.
The euro area is contracting by more than half a percent this year, which growth projected at just under 1% next year.
Emerging-market and developing economies are seen as moderating the more rapid pace of growth that helped balance the world economy in the midst of the financial crisis.