Responding largely to US criticism of its autumn forecasts, the IMF broke precedent and issued its third economic forecast this year. The downward revisions compare with a more optimistic projection of 3.1 per cent for the world as a whole and 2.9 per cent for the industrial countries.
The IMF revisions follow a similar downgrading of prospects by the Organisation for Economic Co-operation and Development. Last week, the OECD reduced its prediction for 1993 growth in the industrial world to 1.9 per cent from 3.6 per cent.
The IMF said only North America was poised to recover. It estimated that the US economy would grow by 3 per cent next year after a 2 per cent expansion in 1992. Germany would expand by just 0.6 per cent, a full 2 percentage points down on its estimate in October. It said that growth this year would be 1.6 per cent, 0.2 percentage points below the previous assessment.
Japan, whose economy has also been softening, was projected to grow 2.4 per cent next year, compared with 1.6 per cent in 1992. But the 1993 figure represents a 1.4 point cent decline from earlier projections and the 1992 estimate is down 0.4 ponts.
In an unusual revision of its semi-annual World Economic Outlook, the IMF said that the deflationary impact from a reduction of debt amassed during the high-flying 1980s was a significant factor in the continued weak outlook.Reuse content