International lender, International Monetary Fund is worried that recent developments in the world’s major economies are not giving hope to the future and there is fear that the global economy could stumble again in the aftermath of the 2008 international financial crisis which hit most of the countries, especially Least Developed Countries.
The fear has been heightened by the recent cracks in some major economies that include the United States and other advanced economies whose growth the lender, known as IMF said is expected to be slow and may ostensibly pose a serious threat to the global economy.
The lender, according to its assessment of the global economic outlook report noted that that it was alarming at the level of developments and asked for all stakeholders to initiate strong fiscal adjustments in advanced economies, with a warning against slashing programs that stimulate economic growth.
The report stated that Europe should repair its banking system which it described as a key player in the global economic recovery from the recession.
According to IMF, strong adjustments credible and balanced fiscal consolidation and financial sector repair and reform in many advanced economies and prompter macroeconomic policy tightening and demand rebalancing in many emerging and developing economies are critical for securing growth and job creation over the medium term.
As a measure, the IMF opted to scale down its global economic growth forecast for this year to 4.3% chiefly on account of a slower than anticipated recovery of the economies of major developed nations that include the United States and Japan.
It was however optimistic that countries in the sub-Saharan including Zambia, Zimbabwe and others within the bounds would sooner or later record positive economic growth, although most of Zambia’s neighbors earlier growth projections remained unchanged and under threat. Recent projects of Zambia’s economic growth have been placed at 6.8% this year by various players including the IMF, World Bank and other country’s key stakeholders.
IMF further stated that activities leading to boost economic growth are on the wane, though temporarily and that downside risks have increased again growth in many advanced economies is still weak. In addition, the mild slowdown observed in the second quarter of 2011 is not reassuring.
The IMF, is however optimistic that the US economic growth in 2011 may probably slowdown to 2.5 per cent from an earlier projection of 2.8%. The lender further sees Japan’s economic growth coming down to 0.7 from 1.4 per cent in the aftermath of earthquake and Tsunami that hit that country.
Overall, the global economy expanded at an annualized rate of 4.3% in the first quarter…however, greater-than-anticipated weakness in US activity and renewed financial volatility from concerns about the depth of fiscal challenges in the euro area periphery pose greater downside risks.
Risks also draw from persistent fiscal and financial sector imbalances in many advanced economies, while signs of overheating are becoming increasingly apparent in many emerging and developing economies.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
