IMF Lowers Its Outlook for World Economy

From VOA Learning English, this is the Economics Report.

The world economy is not growing as fast as many experts had hoped. The International Monetary Fund recently announced it was changing its prediction for future economic activity.

The IMF now says it expects the world economy to grow only a little over 3 percent in 2013, that is down from an earlier prediction of 3.3 percent.

The IMF blamed the slower growth in part on what it called "continuing growth disappointments" in developing countries, and a deeper than expected recession in Europe.

Olivier Blanchard is the chief economist at the IMF.

"The main effect really comes from the slowdown in emerging market economies, but we are also revising down the euro area forecast."

International demand for goods and services has decreased as people buy less, that is especially true in Europe. There a debt crisis and government cost-cutting measures have produced the longest economic slowdown in the history of the 17-nation eurozone.

Peter McGuire studies Asia markets for the financial service company Baxter FX.

"It is not surprising. When you think about as far as global demand, that seems to be softening, and of course with Europe in the position that it's been in, it's just protracted slowness to a point of nearly negative growth across the whole zone."

Reduced demand has slowed growth in faster-growing economies, especially in the countries known as BRIC - Brazil, Russia, India, and China.

Olivier Blanchard says economic activity in the BRIC countries has an affect on more developed economies.

"If, for example, growth in BRICs was to go down by two percent relative to what we predict, then the effect on the U.S., for example, would be half a percent. So it matters."

The IMF has lowered its expectations for economic growth in the United State. Yet recent reports on American housing and employment have suggested slow but steady growth.

This growth has been strong enough for America's central bank to change monetary policies that have kept long-term interest rates at record-low level.

Olivier Blanchard says rising American interest rates could create difficulties for some countries, but he believes it would also be evidence of the stronger recovery for the world's largest economy.

"Along the way, you may have quite a bit of volatility, but on that, the bottom line remains the same, which is - it's good news for the world."

The International Monetary Fund is predicting improvements in the world economy next year. But the IMF says the improving conditions are possible, only if major economies cut long-term debt and support policies that aid near-term growth.

And that's the Economics Report from VOA Learning English, I'm Bob Doughty. For more reports, visit us online at 51voa.com.