IMF lowers its global economic projections

The International Monetary Fund (IMF) slashed its growth forecasts for the global economy this year and next in its annual World Economic Outlook report released yesterday.

The IMF cut its initial prediction for world economic growth from 3.4 percent to 3.3 percent, while shaving 0.2 percentage point from its projection for next year, from 4 percent to 3.8 percent.

The institution’s revision reflects its concerns over potential shock in financial markets worldwide due to the scheduled end to U.S. quantitative easing and possible early interest rate hikes.

However, for Korea, the institution kept its initial forecast unchanged at 3.7 percent for this year.

It raised Korea’s growth for 2015 from 3.8 percent to 4 percent, projecting that the country’s exports and investments would continue increasing, leading to a gradual economic recovery. The IMF forecast that the Chinese economy will grow 7.4 percent this year, unchanged from its earlier prediction. But its growth is predicted to retreat slightly next year to 7.1 percent.

Calling the global predictions “mediocre growth,” Christine Lagarde, managing director of the IMF, called for aggressive “policy momentum” and “multilateralism” from each country to get out of the sluggish economy.

Lagarde said in a recent lecture at Georgetown University that there should be new momentum to overcome the mediocre growth.

Challenges facing the global economy include long-term low growth, asynchronous normalization in the monetary policies of advanced economies and new risks such as shadow banking and geopolitical tensions, the chief of the global economic organization said.

BY SONG SU-HYUN [ssh@joongang.co.kr]