The world economy has entered a “dangerous new phase,” according to the Chief Economist of the International Monetary Fund Olivier Blanchard. “The recovery has weakened considerably. Strong policies are needed to improve the outlook and reduce the risks.”
“Markets have clearly become more sceptical about the ability of many countries to stabilise their public debt,” Blanchard said. “Fear of the unknown is high.” Overall, the IMF predicts global growth of 4% for both years. Stronger growth in China, India, Brazil and other developing countries should offset weaker output in the US and Europe. Financial turmoil and slow growth are feeding on each other in the US and Europe, IMF officials say.