Thread: IMF 'Bath-Salts' Everything As "Global Recovery Showing Signs Of Further Weakness"

IMF 'Bath-Salts' Everything As "Global Recovery Showing Signs Of Further Weakness"



Submitted by Tyler Durden on 07/16/2012 10:01 -0400

• Brazil
• China
• Global Economy
• India
• International Monetary Fund
• recovery
• Unemployment

The IMF just took a bucket of bath-salts to world economies as it slashes growth expectations for every major global economy (and emerging nations suffer too). Noting that Q1's upward surprise was "partly due to temporary factors", they reduce 2012's overall global growth to 3.5% adding that developments during the second quarter have been worse. Job creation has been hampered - with unemployment high in many advanced economies, especially among the young in the euro area periphery; but incoming data from the US also suggests less robust growth than forecast previously. While distortions to seasonal adjustment and payback from the unusually mild winter explain some of the softening, there also seems to be an underlying loss of momentum. Growth momentum has also slowed in various emerging market economies, notably Brazil, China, and India. This partly reflects a weaker external environment, but domestic demand has also decelerated sharply in response to capacity constraints. The baseline projections in this WEO Update incorporate weaker growth through much of the second half of 2012 in both advanced and key emerging market economies, reflecting the setbacks to the global recovery. Downside risks to this weaker global outlook continue to loom large. The most immediate risk is still that delayed or insufficient policy action will further escalate the euro area crisis. How long before those Q4 hockey-stick earnings forecasts get reduced?






Full Report here (pdf)

Imf


IMF 'Bath-Salts' Everything As "Global Recovery Showing Signs Of Further Weakness" | ZeroHedge

IMF Says Japan And Spain Are Done, "Debt Ratio Will Never Stabilize"



Submitted by Tyler Durden on 07/16/2012 10:20 -0400

• Greece
• Gross Domestic Product
• International Monetary Fund
• Japan

The IMF believes that advanced economy deficits will decline by about 0.75 percentage points of GDP this year which 'strikes a compromise between restoring fiscal sustainability and supporting growth". However, continued focus on nominal deficit targets runs the risk of compelling excessive fiscal tightening if growth weakens. In addition, there is a risk in the United States of political gridlock that puts fiscal policy on autopilot and results in a sharp and sudden decline in deficits—the “fiscal cliff.” What is more troubling is the significant upward revision to all of the peripheral European nations (with Greece now at 171% Debt/GDP in 2013 versus 160.9% forecast only 3 months ago). While the average debt-to-GDP ratio among advanced economies is projected to continue to rise over the next two years, surpassing 110 percent of GDP on average in 2013, debt ratios will by then have peaked in several advanced economies - though rather explosively they do not see debt ratios for Spain and Japan stabilizing.
Debt/GDP ratios seen rising across Europe and most specifically Greece is losing it again and Spain bleeding fast...



Spain and Japan are seen to have debt ratios that are not stabilizing...






IMF2

IMF2


IMF Says Japan And Spain Are Done, "Debt Ratio Will Never Stabilize" | ZeroHedge