IMF to Cut Global Growth Forecasts
The Wall Street Journal (10 October 2007)
BERLIN -- The International Monetary Fund will cut its 2008 growth outlook for all major economies in its World Economic Outlook report due next week, a person with access to the IMF report said Tuesday.In its report, which follows its previous update in July that took place ahead of global financial market turmoil, the Washington-based fund now forecasts world economic growth of 4.8% for 2008, compared with the 5.2% forecast in July, according to the person.The IMF has already said the recent global credit squeeze caused by the meltdown of risky U.S. mortgage loans has heightened risks to the global economy. Monday, IMF Managing Director Rodrigo de Rato said the dollar is undervalued in the aftermath of the U.S. subprime lending meltdown as well as the U.S. Federal Reserve interest rate cut and that recent financial turbulence has brought a "change of scenario" after several years of strong global economic growth.In its outlook report, the IMF will cut its forecast for U.S. growth to 1.9% from 2.8% previously, while forecasting Canada's real gross domestic product to grow 2.3% next year, compared with 2.8% previously forecast, according to the person familiar with the report.The euro-zone economy is expected to grow less strongly than previously forecast, by 2.1% in 2008, compared with 2.5%. Europe's largest economy Germany should see 2.0% growth in 2008, down from the previous 2.4% forecast. France should also see 2.0% growth next year, compared with the 2.3% predicted previously. The IMF also forecasts China's economy will grow by 10.0% in 2008, down from the previous 10.5% forecast. The IMF's lower forecasts will also come as finance ministers and central bankers of the Group of Seven leading industrial nations meet in Washington for talks next week where they are expected to address the issue of foreign currencies, including the weak dollar. Some euro-zone officials say the strength of the euro makes it more difficult for the 13-member strong bloc to compete with U.S. and Chinese goods. The euro recently hit a new record against the dollar and the yen.
The Wall Street Journal (10 October 2007)
BERLIN -- The International Monetary Fund will cut its 2008 growth outlook for all major economies in its World Economic Outlook report due next week, a person with access to the IMF report said Tuesday.In its report, which follows its previous update in July that took place ahead of global financial market turmoil, the Washington-based fund now forecasts world economic growth of 4.8% for 2008, compared with the 5.2% forecast in July, according to the person.The IMF has already said the recent global credit squeeze caused by the meltdown of risky U.S. mortgage loans has heightened risks to the global economy. Monday, IMF Managing Director Rodrigo de Rato said the dollar is undervalued in the aftermath of the U.S. subprime lending meltdown as well as the U.S. Federal Reserve interest rate cut and that recent financial turbulence has brought a "change of scenario" after several years of strong global economic growth.In its outlook report, the IMF will cut its forecast for U.S. growth to 1.9% from 2.8% previously, while forecasting Canada's real gross domestic product to grow 2.3% next year, compared with 2.8% previously forecast, according to the person familiar with the report.The euro-zone economy is expected to grow less strongly than previously forecast, by 2.1% in 2008, compared with 2.5%. Europe's largest economy Germany should see 2.0% growth in 2008, down from the previous 2.4% forecast. France should also see 2.0% growth next year, compared with the 2.3% predicted previously. The IMF also forecasts China's economy will grow by 10.0% in 2008, down from the previous 10.5% forecast. The IMF's lower forecasts will also come as finance ministers and central bankers of the Group of Seven leading industrial nations meet in Washington for talks next week where they are expected to address the issue of foreign currencies, including the weak dollar. Some euro-zone officials say the strength of the euro makes it more difficult for the 13-member strong bloc to compete with U.S. and Chinese goods. The euro recently hit a new record against the dollar and the yen.
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