The International Monetary Fund (IMF) has downgraded its growth forecasts in its World Economic Outlook update citing growing global economic uncertainty, the European crisis and the continually deteriorating global financial conditions.

 

Treasurer Wayne Swan described the downgrade as a warning to all countries that the global economy continues to face serious threats of further deterioration in the face of a possible recession in Europe.

 

The IMF expects global GDP to grow 3.3 per cent this year, down markedly from the 4.0 per cent predicted in September. Global GDP growth in 2013 has also been downgraded to 3.9 per cent, down from 4.5 per cent.

 

The IMF reiterated it’s warning that the Euro area will enter a recession, with the report finding “the euro area economy is now expected to go into a mild recession in 2012 as a result of the rise in sovereign yields”.

 

The report also projects that high global unemployment will continue, with sluggish growth rates failing to make an impact on the ‘very high unemployment’ rates.

 

The full report update can be found here