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The big picture view of an ever-changing global economy.

IMF cuts growth forecasts for U.S. and Europe

"Fear of the unknown is high," the IMF's chief economist warns. Except for China and India.
China economy 2011 09 19Enlarge
China's Premier Wen Jiabao delivers his keynote address at the summer session of the World Economic Forum in the Chinese port city of Dalian, northeast China's Liaoning province on Sept. 14, 2011. (AFP/Getty Images)

It wouldn't be Tuesday if we didn't have more bad news about the global economy.

Today's dose comes courtesy of the International Monetary Fund, which has slashed its growth forecasts for both the U.S. and Europe.

The IMF now says the U.S. economy will grow just 1.5 percent this year, and 1.8 percent in 2012. That's down from earlier forecasts of 2.5 and 2.7 percent.

The euro zone is in even worse shape. The IMF says growth in the 17-country bloc will reach 1.6 percent this year, and only 1.1 percent next (down from 2 percent and 1.7 percent).

“The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing,” the IMF said in its September 2011 World Economic Outlook (WEO).

“Fear of the unknown is high,” added Olivier Blanchard, the organization’s chief economist. “Strong policies are urgently needed to improve the outlook and reduce the risks. Only if governments move decisively on fiscal policy, financial repairs, and external rebalancing, can we hope for stronger and more robust recovery.”

The news isn't all bad, though. 

Growth is expected to hit 6.4 percent this year in emerging and developing countries, thanks largely to China (9.5 percent) and India (7.8 percent).