Global economy 'slowing down temporarily': IMF

Global economy 'slowing down temporarily': IMF

Disturbing news: Euro zone debt turmoil is a major worry

The latest projection is a tad lower than 4.4 per cent expansion estimated by the multilateral lender in April. Last year, the global economy had expanded by 5.1 per cent.

“Activity is slowing down temporarily, and downside risks have increased again. The global expansion remains unbalanced,” the IMF said in World Economic Outlook report, released on Saturday. In 2012, the world economy is anticipated to see 4.5 per cent growth.

The global lender raised concerns about sluggish growth in advanced nations and debt turmoil in euro zone while noting that emerging markets were witnessing strong growth.

“Greater than anticipated weakness in US activity and renewed financial volatility from concerns about the depth of fiscal challenges in the euro area periphery pose greater downside risks,” the report said. Pointing out that the “mild slowdown” seen in the 2011 second quarter was not reassuring, IMF said that global economy expanded at an annualised rate of 4.3 per cent in the first quarter.

 “Risks also draw from persistent fiscal and financial sector imbalances in many advanced economies, while signs of overheating are becoming increasingly apparent in many emerging and developing economies,” the report noted.

The IMF said that global inflation rose to four per cent in 2011 first quarter from 3.5 per cent in the last three months of 2010. “Inflation accelerated mainly because of larger-than- expected increases in commodity prices.

“Among emerging and developing economies, inflation pressures have become increasingly broad-based, reflecting a higher share of food and fuel in consumption as well as accelerating demand pressure,” it added.

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