Yikes: IMF lowers global economic growth forecasts. (…Wait. Huh?)

posted at 8:41 pm on July 9, 2013 by Erika Johnsen

Hold on a moment. Didn’t I just write that exact same headline, less than three months ago? …Yes, dear readers. Yes I did.

In April, the International Monetary Fund scaled back its global economic growth forecast for 2013 to 3.3 percent, down 0.2 percent from their January estimate, and held constant their 4 percent growth estimate for 2014. Now, the IMF is again scaling down both of their global estimates: 3.1 percent for 2013, and 3.8 percent for 2014. “Unexpectedly.” …While we’re on the subject, would anyone care to place bets on what the forecast might look like another few months from now?

World economic growth will struggle to accelerate this year as a U.S. expansion weakens, China’s economy levels off and Europe’s recession deepens, the International Monetary Fund said.

Global growth will be 3.1 percent this year, unchanged from the 2012 rate, and less than the 3.3 percent forecast in April, the Washington-based fund said today, trimming its prediction for this year a fifth consecutive time. The IMF reduced its 2013 projection for the U.S. to 1.7 percent growth from 1.9 percent in April, while next year’s outlook was trimmed to 2.7 percent from 3 percent initially reported in April.

“Downside risks to global growth prospects still dominate,” the IMF said in an update to its World Economic Outlook. It cited “the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the U.S. leads to sustained capital flow reversals.”

The fund urged central banks in wealthy nations facing low inflation and economic slack to keep injecting stimulus until recovery is entrenched, saying rising longer-term interest rates have hurt emerging markets the most.

I can’t be the only one feeling like they’re taking crazy pills, can I? I’m still hoping (against hope) that our collective growth won’t sink any further, but what is the deal with these ostensibly esteemed economic institutions rarely-to-never failing to inflate the outlook of the world’s various economies, only to have to revise and contract their estimates a little later on? I realize that the collective and individual economies each have too many constantly, quickly moving parts and interactions that require updated considerations, but come on. As long as too many government the world over utterly fail to substantively reform their unsustainable debt and deficit habits, to improve their business climates through tax and regulatory reform, or to have any long-term success whatsoever at “injecting stimulus” and “creating” jobs, actual economic improvement is going to be rough going. The IMF’s report recommended that “policymakers everywhere need to increase efforts to ensure robust growth,” but maybe what they should actually do is just stop trying.

One of the biggest drags is coming from the world’s largest currency bloc — the ailing eurozone that roundly refuses to even acknowledge the dissipation of the the contrived arrangement as an option for fixing their woes without pulling out their smelling salts. It doesn’t have to be this way.

The great fear is that to reintroduce a national currency, a country would have to forcibly redenominate private assets and liabilities in the process. For firms, households and investors, uncertainty about whether their euros will eventually be confiscated and replaced with a debased national currency could lead to capital flight, economic chaos and years of litigation, if not worse.

But there is an alternative to forced redenomination. Greece or any other country in the euro zone could easily reintroduce a national currency without generating the kind of financial and economic calamity envisioned so far—provided it got the mechanics right.

The key is to fix the initial amount of new currency to be issued while allowing the market to set the price at which the exchange takes place. In this scenario, the central bank would announce that it is willing to purchase euros from domestic banks, the Greek public and anyone else, using newly issued drachmas as payment. All such transactions would take place during a specified transition period and be entirely voluntary. This would not be an exercise in confiscation. …


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I am perfectly happy to see a depression hit our beloved United States of America. Those who do bad things should feel their results. It is going to happen at some point, you cannot put off the inevitable forever. Better to happen while 0 is still in office rather than 9 months after the election of a Republican president to blame.

astonerii on July 9, 2013 at 8:47 PM

I wonder when Hopey gives a IMF,it ain’t Going to H*ll in a Hand-Basket Speechy!
(sarc)

canopfor on July 9, 2013 at 8:53 PM

Anyone else hear that, a faint rumbling in the distance? It’s like…like…I don’t know…tanks churning down a road and thousands of hobnailed boots marching in cadence or something.

Eh, it’s probably nothing. Never mind.

Bishop on July 9, 2013 at 8:54 PM

but what is the deal with these ostensibly esteemed economic institutions rarely-to-never failing to inflate the outlook of the world’s various economies, only to have to revise and contract their estimates a little later on? I realize that the collective and individual economies each have too many constantly, quickly moving parts and interactions that require updated considerations, but come on.

If they don’t lie, the retail investors might pull out of the market. It really is that simple.

abobo on July 9, 2013 at 8:59 PM

When the IMF raises its global GDP estimate let me know.

Oh that’s right, only happens when a republican is president.

propagandist much?

jukin3 on July 9, 2013 at 9:03 PM

The fund urged central banks in wealthy nations facing low inflation and economic slack to keep injecting stimulus until recovery is entrenched, saying rising longer-term interest rates have hurt emerging markets the most.

Honey, keep using the credit card to pay the bills.

Emerging markets….I love it. The thing about emerging markets is they force inflation on other economies, then suck out capital and jobs.

You never hear that on CNBC.

BobMbx on July 9, 2013 at 9:03 PM

America, circe 2013

On Drudge:

Watch lifestyles, attitudes and behaviors…

Odd working hours, unexplained travel…

Monitor co-workers stress, divorce, financial problems…

Track online activities…

Those failing to report face penalties, criminal charges…

OBAMA ORDERS FED WORKERS: SPY ON EACH OTHER

Schadenfreude on July 9, 2013 at 9:13 PM

Yikes: IMF lowers global economic growth forecasts. (…Wait. Huh?)

Ooooh, maybe I better start prepping, pulling cash out of my bank and buy PMs now. Oh wait, I have been for years…never mind.

Dr. ZhivBlago on July 9, 2013 at 9:13 PM

The answer is obvious……we need to find another inhabited planet with a large percentage of stupid people, AND START BORROWING FROM THEM!

GarandFan on July 9, 2013 at 9:18 PM

“Downside risks to global growth prospects still dominate.”

Ya think? Like total collapse and all out war?

You ever notice how silly a game of Monopoly gets at the end?

wolly4321 on July 9, 2013 at 9:18 PM

…at this point…what difference does it make?

KOOLAID2 on July 9, 2013 at 9:19 PM

How unexpected!

rbj on July 9, 2013 at 9:19 PM

From personal observation, I’ll say this. I sell stuff all over the world and this is the slowest summer I have ever seen. I had a great spring, but it has just slowly died over the last few weeks.

Oddly, a somewhat significant piece of what I have been doing has come from places like Spain and Italy which are supposed to be some of the hardest hit. But, I sell things that could be considered non-cash assets, so it could be that individuals are just making moves to protect wealth.

trigon on July 9, 2013 at 9:21 PM

OT…Obama Gives Himself Control of All Communication Systems in America

Anyone else see this?

CoffeeLover on July 9, 2013 at 9:05 PM

Thanks. This came out one year ago. What we’re still waiting for obviously is to see if they actually do anything with this power…well, besides spying on us.

Dr. ZhivBlago on July 9, 2013 at 9:40 PM

…at this point…what difference does it make?

KOOLAID2 on July 9, 2013 at 9:19 PM

None.

Axe on July 9, 2013 at 9:46 PM

Anyone else see this?

CoffeeLover on July 9, 2013 at 9:05 PM

.
That’s a year old… try to catch up, OK?

ExpressoBold on July 9, 2013 at 9:48 PM

I’m still hoping (against hope) that our collective growth won’t sink any further…

Obamacare is coming. That will insure further decline.

rickv404 on July 9, 2013 at 9:49 PM

That’s odd that the article says he signed it July 6, 2013. Thanks all for the input.

CoffeeLover on July 9, 2013 at 9:58 PM

Barkycare has nothing much to do with global economic growth, only our economic suppression. I don’t see where that makes sense. Some other economies might actually benefit from it.

wolly4321 on July 9, 2013 at 10:06 PM

Didn’t one of our Canadian trolls just tell us that we were “on the precipice of a recovery”?

slickwillie2001 on July 9, 2013 at 10:18 PM

Didn’t one of our Canadian trolls just tell us that we were “on the precipice of a recovery”?

slickwillie2001 on July 9, 2013 at 10:18 PM

One misstep and it’s a long way down to ‘prosperity’.

trigon on July 9, 2013 at 11:40 PM

OT…Obama Gives Himself Control of All Communication Systems in America

Anyone else see this?

CoffeeLover on July 9, 2013 at 9:05 PM

CoffeeLover: No biggie on the date,

I sent in to tips,a few times,and felt like crawling under a rock!

I check the time,and date,first and foremost!—-:O

canopfor on July 9, 2013 at 11:58 PM

By the prickle of my thumb, something wicked this way comes…

When the dollar is dislodged from its catbird seat as the world currency, then all manner of hell breaks loose. Take that to the bank.

While you still can.

bobcalco on July 10, 2013 at 8:03 AM