The International Monetary Fund may this week trim its global growth forecast due to current econ mic situation in emerging countries, according to IMF chief Christine Lagarde.
Speaking Sunday at an economic conference in France, Lagarde noted that she would not issue an official statement on the matter until later this week, although some economists have long predicted the Washington-based fund would cut its growth figures as economies around the world continue to grow at slower-than-projected rates.
Lagarde said she feared developments in emerging countries in particular – not developing countries and low-income countries but emerging countries – saying economic data seems to indicate an impending slowdown.
While Lagarde targeted her remarks at emerging economies, the IMF chief also had harsh words for U.S. lawmakers on Capitol Hill. Lagarde criticized lawmakers for enacting across-the-board spending cuts, saying they would hamper U.S. growth.
Spending cuts for the U.S. federal government went into place earlier this year, as Congress failed to to reach an agreement on an alternative. The cuts have led to a series of layoffs for agencies around the country, including those for traffic controllers and the U.S. Department of Defense.
Lagarde’s recent comment echo those from recent months in which the IMF chief said deficit reduction in 2013 had overstepped its design goals, and would lead to slower growth and less taxable revenue.
The IMF forecast for economic growth is currently slated to be 1.9 percent this year. The figure is one of the lowest ever put forth by the international fund and the organization reckons that growth could be as much is 1.75 percent higher if not the rush to cut government budget deficits. The Washington-based fund predicted in April that the world economy would expand 3.3 percent.
While budget cuts that took place in March do not appear to be hitting government payrolls directly, some economists of warn that additional budget cuts slated to take place later this year could have an economic impact.
While Lagarde took direct aim at Washington for the budget cuts, she also warned that both Washington, as well as Tokyo, need to come up with fresh plans to reduce their overall debt. Japan has pledged to have the primary deficit by 2016 and bring it to surplus by 2021, part of the plan to contain it balloon in public that
Democratic lawmakers on Capitol Hill have criticized Congress for its willingness to back widespread spending cuts, rather than negotiate an alternative set of spending reforms. The cuts took place after Congress in 2011 passed a law saying that if lawmakers failed to agree on a plan to reduce the U.S. deficit by $4 trillion — including the $2.5 trillion in deficit reduction lawmakers in both parties have already accomplished over the last few years — nearly $1 trillion in automatic, arbitrary and across the board budget cuts would start to take effect in 2013.Have something to say? Let us know in the comments section or send an email to the author. You can share ideas for stories by contacting us here.