Posts Tagged ‘IMF forecast’

IMF Cuts Global Economic Growth Forecast

January 25th, 2012 Comments off

The International Monetary Fund has another revised global forecast that reflects growing pessimism. In the debt-crisis ravaged Eurozone, the IMF now projects negative growth of minus .5 percent, in effect a double-dip recession. A recession means plummeting tax revenue, rendering the sovereign debt crisis even more  virulent.

While the IMF still projects overall global growth, though at a lower projected 3.3 percent, its latest report states that this strangely optimistic projection is “predicated on the assumption that in the euro area, policymakers intensify efforts to address the crisis.” In other words, the Eurozone must reverse its fiscal austerity, and once again engage in deficit stimulus spending.

What the IMF seems to ignore is that the bond market is increasingly unlikely to lend money to debt-strapped European economies at interest rates that are sustainable. Or, perhaps, the IMF is hoping it will gain a massive cash infusion so it can bail out Eurozone economies, or the European Central Bank will get the hint, and start running its printing press at maximum velocity. But not even the ECB’s printing machine, along with the IMF, can easily sort out this economic and fiscal crisis.