adminThe International Monetary Fund has cut its global economic growth forecasts and warned that the US would harm the world economy if it fails to raise its borrowing limit.
The international lending agency said on Tuesday that the global economy will grow 2.9 percent this year and 3.6 percent next year. Both are 0.2 percentage point lower than the group’s July forecasts.
It cited the slower growth in China, India, Brazil and other developing countries as the main reason for the downgrade.
But the IMF also lowered its outlook for the US economic growth this year to 1.6 percent and next year to 2.6 percent. Those are 0.1 and 0.2 percentage points lower than in July, respectively.
The fund’s forecasts assume the US partial government shutdown would last only a short period. But it warned that failure to raise the United States government’s borrowing limit later this month could lead to a default on US debt which would push up interest rates, disrupt global financial markets and possibly push the US economy back into recession.
“Failure to lift the debt ceiling would be a major event,” said Olivier Blanchard, the IMF’s chief economist. – Al Jazeera
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