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Lagarde: IMF set to cut global growth forecasts

Friday, 6 July 2012 9:58 AM

Christine Lagarde has announced that the International Monetary Fund (IMF) is to lower global economic growth forecasts after highlighting the Eurozone debt crisis as a “key risk”.

Speaking in Tokyo ahead of talks with Japanese prime minister Yoshihiko Noda, she warned: “The global growth outlook will be somewhat less than we anticipated just three months ago.

“And even that lower projection will depend on the right policy actions being taken.”

The latest forecasts will be published on July 16, following an April estimate of 3.5 per cent.

Earlier this week, the IMF lowered its growth forecast for the US economy from 2.1 per cent to two per cent and warned that the Obama administration could be cutting the deficit too quickly for the weak economy.

It said in a report that concerns about the Eurozone debt crisis and uncertainty over domestic fiscal plans were creating a “challenging environment” for the world’s largest economy.

“Over the past few months, the outlook has, regrettably, become more worrisome,” Ms Lagarde said in Tokyo.

“Many indicators of economic activity – investment, employment, manufacturing – have deteriorated. And not just in Europe or the US.

“This is a global crisis.

“In today’s interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognise borders.”

She added that Japan’s economy is at risk from a further appreciation of the yen if the Eurozone debt crisis causes a flight away from riskier assets.

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