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The Global Economy Is Worse Than We Thought

by anonymous

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Over the last several years, as major advanced markets like the United States and Europe struggled, fast-growing countries like China and India provided a vital boost to the global economy. Well, so much for that.

In a new report released on Tuesday, the International Monetary Fund says that China, India, Brazil, Mexico and other developing countries are growing more slowly than previously thought. That weakness, combined with Europe’s enduring recession and middling growth in the United States, means the global economy will grow at 3.1 percent this year, about the same as last year and down from the I.M.F.’s April forecast of 3.3 percent.

Developing economies are struggling for a variety of reasons. Some, like Brazil and Russia, are hurting because there is less demand for their exports in the United States, Europe and elsewhere. China is trying to reduce its reliance on exports and investments while increasing the importance of domestic consumer spending. Some countries are also under pressure as foreign investors start moving money out of emerging markets to invest it in the United States, where interest rates have risen in recent days.


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