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THE EURO CRISIS CASTS A CHILL OVER A SUNNIER ECONOMIC PICTURE

Aruba, April 26, 2012 - UNTIL recently, the spring meetings of the International Monetary Fund (IMF) and World Bank, due to be held this weekend in Washington, DC, looked set to coincide with blossoming optimism about the world economy. But the euro crisis is again casting an unseasonal chill.
Things look brighter than they did even a few months ago. America’s fragile recovery continues.

After a disastrous 2011, Japan is on track for 2% growth in 2012, thanks in part to a boost from reconstruction spending. And the European Central Bank’s interventions in the banking system in December and February have pulled the euro area back from the brink. The IMF’s newest World Economic Outlook nudges up expected global growth in 2012 to 3.5%, from 3.3% in January. In September last year, the IMF reckoned there was a 10% chance of global growth dipping below 2% in 2012. Now the chance is just 1%, it says.

Inflationary pressures that buffeted emerging economies have been dampened by the global slowdown from 2011, allowing more room for monetary easing. The Reserve Bank of India surprised markets on April 17th by cutting its benchmark interest rate by 50 basis points, despite an IMF inflation forecast of 8.2% in 2012. And a well-managed slowdown appears to be in progress in China. The fund has raised its forecast of Chinese output growth to 8.2% in 2012.

Read more/ Source: http://www.economist.com/node/21553042

 

By orbitalnets.com