Tags: IMF | Growth | Forecasts | Debt

IMF to Cut Growth Forecasts on Debt Crisis, Lagarde Says

Friday, 06 Jan 2012 07:09 AM

The International Monetary Fund will probably cut its forecast for global economic growth as the European debt crisis worsens, Managing Director Christine Lagarde said.

The Washington based-fund will publish revised forecasts on Jan. 24 or 25 that is “consistent with reality,” Lagarde told reporters in South Africa’s capital, Pretoria, during a two-day visit to the country.

Euro-area leaders are struggling to solve the region’s sovereign debt crisis that began with Greece in 2009 and has spread to Italy, threatening to push Europe into recession. Standard & Poor’s placed the ratings of 15 euro nations, including AAA rated Germany and France, on review for possible downgrades on Dec. 5.

The IMF in September cut its forecast for global growth to 4 percent in 2012, predicting “severe” repercussions if Europe failed to contain the debt crisis.

Lagarde said the euro currency is “strong” and will survive even as risks of debt defaults increase in the region.

“You have within the zone, not in relation to the currency, serious pressures concerning sovereign debt, concerning the strength of the banking system, which are being addressed,” Lagarde said. “But the currency itself is not one that would vanish or disappear in 2012.”

Lagarde held talks with Finance Minister Pravin Gordhan and is scheduled to meet with Reserve Bank Governor Gill Marcus later today and President Jacob Zuma tomorrow in Bloemfontein, where the ruling African National Congress is holding its centenary celebration.

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2012-09-06
Friday, 06 Jan 2012 07:09 AM
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