The International Monetary Fund (IMF) has downgraded its global economy growth forecasts by .1 per cent, citing ongoing economic turmoil in Europe and the uncertainty in global financial markets. The revised growth figures see the IMF’s forecasts down to 3.5 per cent for the year, the lowest rate since the depths of the global financeal crisis in 2009.

 

A strong first quarter followed by a weakening second quarter was cited as a contributing factor in the revised growth projections. The IMF’s World Economic Outlook index found that strong business recovery and trade results had prompted confidence in the global economy in the first quarter, but slowing job creation and lingering unemployment levels were contributing to the downbeat assessment.

 

The IMF described the Euro’s ongoing woes as the epicenter of the financial market stress, particularly the ongoing political and financial uncertainty in Greece, while banking sector problems in Spain has continuing to plague the government’s ability to deliver fiscal adjustment and reform.

 

New data released from the US are pointing to a less robust growth than expected, with negative spillovers from the Euro zone contributing to an underlying los of momentum. 

 

However, the IMF has stuck to its projected global growth of 3.9 per cent in 2013, with developing country’s set to record a revised growth rate of 5.9 per cent.