The International monetary fund has released its latest report on its outlook for the Global economy, and it doesn’t make pretty reading.
The organisation had been previously criticised for releasing very optimistic figures a few months ago, figures that many financial observers found hard to believe. At the weekend IMF chief Christine Lagarde said that she was ‘desperately optimistic’ that the recovery was on track. To many it sometimes appears that the chief is living on another planet as Asia posts a slowdown in growth, jobless levels continue to disappoint in the United States and the Euro Crisis continues to drag on with no end in sight.
Today’s figures are far more believable then the political rhetoric that world leaders and politicians continue to spout in a bid to save their necks from increasing public anger. The IMF downgraded its forecast for global growth for 2013 to 3.9% from the 4.1% prediction it made in April.
One of the biggest downward revisions was to the UK, now expected to grow by 1.4% in 2013. In April it predicted 2% The forecast for growth in 2012 was also reduced for the UK, down to 0.2% from the 0.8% cited in April.
Measures announced by the Bank of England and finance ministry on Friday said that they would make £80billion of cheap financing available to help banks lend to households and small businesses. In a bid to get the UK economy moving once more the government also announced a £9.4 billion scheme for a huge overhaul of the country’s railway system.
“This is fitting given the weak growth outlook,” it said. “The government has appropriately maintained its commitments to balance the structural current budget within five years … with additional consolidation in store in 2015-17.”
The IMF did not say whether it was now time for Britain to temporarily abandon the deficit-cutting plan that the country’s Conservative-Liberal Democrat government has made the centerpiece of its political strategy.
The IMF’s prediction for world output this year – as measured by gross domestic product – was little changed at 3.5%.
The report continues to point out the obvious by saying ‘utmost priority is to resolve the crisis in the Euro area.’ The situation continues to be bad in the region despite a slight reprieve on the bond markets for the likes of Italy and Spain.
Today’s report flies in the face of a report released today by the Ernst & Young Item club that suggested that the UK is on course to mount a recovery in the second part of the year, raising the question; do any of the financial experts actually have a clue?
The Pound to Euro exchange rate is currently trading at 1.275
The Pound to US Dollar exchange rate is currently trading at 1.561
The Euro to Australian Dollar exchange rate is currently trading at 1.196
The Euro to US Dollar exchange rate is currently trading at 1.223
The Euro to Pound exchange rate is currently trading at 0.783
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