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IMF downgrades global economic outlook

09-21-2011 13:00 BJT

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The International Monetary Fund (IMF) is adjusting its outlook on the global economy. The organization forecasts economic growth to be four-percent in 2011. That figure is a little lower than its projections in June.

A gloomy outlook for both the United States and Europe are the reasons for the IMF's downgrade. But they believe stronger growth in emerging markets like China and India should offset weaker output in the developed world.

It is a gloomy forecast for the global economic outlook.

The IMF says the world economy has entered a "dangerous new phase". As a result, the international lending organization is downgrading its economic outlook for the United States and Europe through the end of next year.

Olivier Blanchard, chief economist of International Monetary Fund

The U-S suffered the most notable downgrade, with expected economic growth at 1.5 percent this year and 1.8 percent in 2012 -- about a percentage point lower from its June forecast.

Olivier Blanchard, chief economist of International Monetary Fund said, "The global economy has entered a dangerous new phase. The recovery has weakened considerably and downside risks have increased sharply. Strong policies are needed both to improve the outlook and reduce the risks."

The IMF also notes that Japan's economy is rebounding from the March earthquake and tsunami disasters, and is expected to contract 0.5 percent this year, which is less than previously estimated.

Blanchard said, "What has happened is that markets have become more skeptical about the ability of policymakers of governments to stabilize their public debt. Worries have spread from countries at the periphery of Europe to countries in the core of Europe, and then to others: Japan, even the United States."

The IMF report also states the global fiscal environment remains subject to a "high degree of risk" despite progress in addressing key fiscal weaknesses in many countries.

Editor:Li Wanran |Source: CNTV.CN

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