Tuesday, September 20, 2011

Slowing Growth and Rising Risks

Slowing Growth, Rising Risks is the title of the World Economic Outlook that the IMF just released. All the chapters can now be accessed via the IMF web site. Growth forecasts are being reduced, more so in advanced economies where growth is forecasted at a rate of 1.5% this year and just 2% in 2012. If you were planning for the next recession this might not sound that bad. But hold on, you just need to read the next sentence in their report: These forecasts assume that

"European policymakers contain the crisis in the euro area periphery, that U.S. policymakers strike a judicious balance between support for the economy and medium-term fiscal consolidation, and that volatility in global financial markets does not escalate"

So not a lot of upside potential and a great deal of downside risk.

Antonio Fatás