The International Monetary Fund (IMF) on Tuesday forecast slower global growth for this year and 2014, citing expectations of a longer recession in Europe and a slowdown in key developing countries like China and Brazil.
The update of the IMF World Economic Outlook first issued three months ago now projects the global economy will expand by 3.1 percent this year, the same rate as in 2012 and down from a forecast of 3.3 percent in April. The 2014 growth forecast was lowered to 3.8 percent from 4 percent.
The IMF said new risks had emerged in the last three months, including the possibility of a longer slowdown in developing economies.
A recession in the 17 countries that use the euro currency is becoming deeper than expected, and was a major factor in the downward revision, the IMF said. The euro-zone now is expected to contract by 0.6 percent this year, compared to a 0.4 percent decline projected in April.
The U.S. economy also looks weaker than previously forecast, the IMF said, citing tight fiscal and financial conditions. The IMF reduced U.S. growth forecasts to 1.7 percent this year and 2.7 percent in 2014 from earlier projections of 1.9 percent and 2.9 percent.
The IMF advised wealthier countries to restructure their economies and bring debt down to sustainable levels.