Reuters) – The International Monetary Fund on Monday cut its forecast for global economic growth and warned that the outlook could dim further if policymakers in Europe do not act with enough force and speed to quell their region’s debt crisis.
In a mid-year health check of the world economy, the IMF said emerging market nations, long a global bright spot, were now being dragged down by Europe. It said a drop in exports in these countries would combine with earlier policies meant to prevent overheating and slow growth more sharply than hoped.
The IMF shaved its 2013 forecast for global growth to 3.9 percent from the 4.1 percent it projected in April, trimming projections for most advanced and emerging economies. It left its 2012 forecast unchanged at 3.5 percent.
“Downside risks to this weaker global outlook continue to loom large,” the IMF said. “The most immediate risk is still that delayed or insufficient policy action will further escalate the euro area crisis.”
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