MF warns on weak recovery

MF warns on weak recovery

By Claire Jones in Tokyo The failure of US and eurozone policy makers to tackle their fiscal woes is threatening an already “slow and bumpy” global economic recovery, the International Monetary Fund has warned. In its World Economic Outlook, the IMF downgraded its forecasts for global growth next year and provided ammunition to critics of austerity, concluding that governments had systematically underestimated the damage done to growth by tax rises and spending cuts. The IMF now believes economic output will expand by 3.6 per cent, down from its July estimate of 3.9 per cent. But this assumes the US Congress will take action to avoid the “fiscal cliff” – the automatic expiry of tax cuts and introduction of spending reductions next year – and that eurozone governments will follow the European Central Bank’s plan to buy sovereign debt by committing to economic reform and closer integration. http://link.ft.com/r/NA70KK/8ZVJ12/IYD9ZO/WTDIUY/WHHWL5/FW/h?a1=2012&a2=10&a3=8