IMF warns of slowing world economic growth

Global economic growth is likely to slow down towards the end of the year

Global economic growth is likely to slow down towards the end of the year, according to a forecast by the International Monetary Fund (IMF).

The IMF points to the weak financial industry and uncertainty in a few national economies as factors that contribute to the slowdown.

It urged developed economies to trim their budget deficits to address the issue. The IMF also warned that a further worsening of the property market in the United States, where the global financial meltdown began, will contribute to the gloomy global economy.

The financial institution warns that sources of credit may soon decline if the figures for home repossessions in the United States continue to grow.

Lingering weakness in the U.S. housing sector and jobs market, as well as euro zone debt issues, and a drop in manufacturing output in Asia have increased speculation among investors that the world economy will slow significantly in the coming months.

In a briefing note, the IMF recommends governments to re-balance their economies, and for emerging markets in Asia to rely less on exports and focus efforts in stimulating internal demand.

The agency also urged advanced economies to hike their exports while decreasing their budget deficits. It said the utmost priority for policymakers was to regain market confidence without limiting recovery.

Governments in advanced economies have been implementing new measures to cut their ballooning budget deficits in order to build confidence among market investors, who have been asking for increased premiums to hold risk.

Posted by James Fried on Sunday September 12 2010, 9:36 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0