The International Monetary Fund cut its forecast for global growth and warned that the European debt crisis threatens to derail the world economy.
“The epicenter of the danger is Europe but the rest of the world is increasingly affected,” Olivier Blanchard, the fund's chief economist, said today at a news conference in Washington. “There's an even greater danger, namely that the European crisis intensifies. In this case the world could be plunged into another recession.”
The fund, in an update of its World Economic Outlook report, lowered its estimate for global growth this year to 3.3 percent from a September forecast of 4 percent. The expansion next year will be 3.9 percent, down from 4.5 percent. The euro area may enter a “mild recession” in 2012 as it shrinks 0.5 percent. The U.S. outlook was unchanged at 1.8 percent growth.
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