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IMF warns world about ‘dangerous’ phase of decline


The world economy has entered a “dangerous new phase” of declining growth that will require policymakers to take action, the chief economist of the International Monetary Fund (IMF) warned Tuesday.

“Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing,” said in the report, which was released prior to the IMF’s annual meetings this week.

In its “World Economic Outlook,” the IMF steeply downgraded projections it made in June regarding the U.S. economy. The international lending organization had predicted a growth of 2.5 percent in 2011 and 2.7 percent in 2012. In just three months, the forecast has changed to 1.5 percent in 2011 and 1.8 percent in 2012.

Even to meet those levels of growth, the U.S. economy would need to expand at a much faster rate in the second half of this year than the 0.7 percent rate of the first six months.


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