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The International Monetary Fund's member countries on Saturday said bold action was needed to bolster the global economic recovery and they urged governments not to squelch growth by tightening budgets too drastically, although Germany poured cold water on the idea of a new global "crisis."

With Japan's economy floundering, the euro zone at risk of recession and even China's expansion slowing, the IMF's steering committee said focussing on growth was the priority.

"A number of countries face the prospect of low or slowing growth, with unemployment remaining unacceptably high," the International Monetary and Financial Committee said on behalf of the Fund's 188 member countries.

The Fund this week cut its 2014 global growth forecast to 3.3 percent from 3.4 percent, the third reduction this year as the prospects for a sustainable recovery from the 2007-2009 global financial crisis have ebbed, despite hefty injections of cash by the world's central banks.

The IMF has flagged Europe as the top concern, a sentiment echoed by many policymakers, economists and investors gathered in Washington for the Fund's fall meetings.



The United States has been a relative bright spot in the otherwise darkening global economic picture, and investors have rushed into dollars as a result.

Still, while U.S. growth has picked up, soft inflation and wage growth suggest the slowest-ever postwar recovery is not delivering a sustained boost to demand, and concerns are growing that the global slowdown will undercut the U.S. economy as well.

The recovery goes from strength to strength.

Edited by interestrateripoff

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IMF launches consultations on Islamic finance

Islamic finance where you don't pay interest but "rent" instead?

What is it with religious people and euphemisms?

Im not a sadist, I'm beating the bad spirits out of the child

Im not a paedo, the devil has possessed me

Its not interest, its rent.

...anyway, hopefully the eurocrats will be true to form and royally screw things up just before our general election. Should be interesting for UKIP, if nothing else.

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IMF's Vinals says economic outlook at risk of downgrade

LONDON - The world's economic recovery is weak and some assets are still overpriced, a senior International Monetary Fund official said on Thursday.

Fire up the printing presses lets stimulate the economy and hope the overpriced assets boosted by the previous QE don't get boosted further.... I wonder how many of these overpriced assets are keeping banks solvent?

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The IMF’s latest World Economic Outlook (WEO) foresees lower global growth compared to last year, with modest pickup in advanced economies and a slowing in emerging markets, primarily reflecting weakness in some large emerging economies and oil-exporting countries.

“Six years after the world economy emerged from its broadest and deepest postwar recession, the holy grail of robust and synchronized global expansion remains elusive,” said Maurice Obstfeld, the IMF Economic Counsellor and Director of the Research Department.

“Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago,” Obstfeld said.

Global real GDP grew at 3.4 percent last year, and is forecast to grow at only 3.1 percent this year. Growth is expected to rebound to 3.6 percent next year (see table).

These forecasts reflect a world economy that is at the intersection of at least three powerful forces, Obstfeld noted. First, China’s economic transformation—away from export- and investment-led growth and manufacturing, in favor of a greater focus on consumption and services; second, and related, the fall in commodity prices; and third, the impending increase in U.S. interest rates, which can have global repercussions and add to current uncertainties.

In this global environment, with the risk of low growth for a long time, the WEO underlines the need for policymakers to raise actual and potential growth.

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But the real punchline is that, as expected, the IMF which saw global growth at 3.8% one year ago, has cut its forecast 4 times in the past 4 quarters, and a 3.1% this is the lowest global growth rate going back to the financial crisis.


And while a Chinese growth cut is just a matter of time, even if the trajectory is all too clear...


... the biggest problem had nothing to do with any particular country's GDP growth, but with what has emerged over the past year as the biggest threat to global growth: the lack of trade. Sure enough, the IMF just cut its 2015P trade forecast from 4.1% to 3.2%, and putting the collapse in global trade in context, back in 2011 the IMF saw 6.9% in global growth. This number is now down nearly 60% 4 years later to a paltry 3.1% and sliding fast.


Why is this a problem? Because while central banks can reflate asset values all they want, they can't print trade, and a global world needs trade more than anything to grow.

Source: IMF

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IMF told that amid 'new mediocre' no room for mistakes by cen banks

Well all the critical mistakes have already been made haven't they???

I like the term 'New Mediocre' and its reflection on the competence of Yellen, Carney, Lagarde et al. but 'Second Great Depression' is more accurate.

Edited by zugzwang

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From the "stronger buffers" link above

The former French finance minister has spent much of the last four years steering the IMF through the Greek crisis, which almost resulted in the country’s bankruptcy and exit from the euro currency bloc.


So it was the IMF in trouble.

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The International Monetary Fund concluded its annual meeting in Lima with a warning to central bankers that the world economy risks another crash unless they continue to support growth with low interest rates.

The Washington-based lender of last resort said in its final communiqué that uncertainty and financial market volatility have increased, and medium-term growth prospects have weakened.

“In many advanced economies, the main risk remains a decline of already low growth,” it said, and this needed to be supported with “continued accommodative monetary policies, and improved financial stability”.

The IMF’s managing director, Christine Lagarde, said there were risks of “spillovers” into volatile financial markets from central banks in the US and the UK increasing the cost of credit. The IMF has also urged Japan and the eurozone to maintain their plans to stimulate their ailing economies with an increase in quantitative easing.

But she urged policymakers in Japan and the eurozone to boost their economies with an expansion of lending banks and businesses via extra quantitative easing. But the policy of cheap credit and the $7 trillion of quantitative easing poured into the world economy since 2009 has become increasingly controversial.

They can't increase rates because it will trigger a financial crisis with the over-leveraged. However if they don't increase rates easy money will trigger another financial crisis. Either way a debt deflation depression seems inevitable at some point, although knowing when the crisis point is, is anyone's guess.

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