IMF Downgrading 2010 & 2011 Growth Forecasts, No Double-Dip Recession

The International Monetary Fund is out taking the wind out of the sails of growth.  Not just in the United States.  Elsewhere too.  The good news is that this is still a move farther and farther away from the notion of a true double-dip recession.  The world economy is expected to grow 4.8% in 2010, and that figure is now put at 4.2% growth for 2011.  Dismissing the double dip: “but a sharper global slowdown is unlikely… But it is an unbalanced recovery, sluggish in advanced countries, much stronger in emerging and developing countries.”  Another quote, one which governments need to heed, is, “Unless advanced countries can count on stronger private demand, both domestic and foreign, they will find it difficult to achieve fiscal consolidation. And worries about sovereign risks can easily derail growth.”

Growth in advanced economies is expected to be 2.7% in 2010 and 2.2% in 2011, but economic slack is expected to remain substantial and unemployment persistently high for some time.  Emerging and developing economies are projected to grow at 7.1% in 2010 and grow by 6.4% in 2011.

The big changes that are lower than the projections made in July come to the United States, Mexico, and Central and Eastern Europe.  What is interesting is that it seems that if the U.S. is still leading the global gravy train that the IMF is looking for more internal growth rather than dependent growth… or the IMF may need to downgrade growth projections later.

Here is a chart outlining the changes expected in the world countries and regions:

JON C. OGG