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US and Europe risk double-dip recession, warns IMF. The International Monetary Fund warned on Tuesday that the United States and the eurozone risk being plunged back into recession unless policymakers tackle the problems facing the world's two biggest economic forces.
In its half-yearly health check, the Washington-based fund said the global economy was "in a dangerous place" and that its forecast of a slow, bumpy recovery would be jeopardised by a deepening of Europe's sovereign debt crisis or over-hasty attempts to rein in America's budget deficit. "Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing," the IMF said as it cut its global growth forecast for both 2011 and 2012.
The IMF also cut its growth forecasts for the UK economy and advised George Osborne to ease the pace of deficit reduction in the event of any further downturn in activity. "The eurozone is a major source of worry. Will Europe trigger another global economic crisis? Please support our site by enabling javascript to view ads.
The euro zone debt crisis took another dramatic turn Tuesday as thousands of Italians hit the streets in a general strike, protesting a new round of austerity measures. Europe's woes continue to rile global investors. The Swiss National Bank surprised the markets by setting an exchange rate cap on the soaring franc, which investors have been flocking to as a safe-haven currency. European stock markets, meanwhile, hit their lowest point in two years Tuesday. While Europeans take their August vacations and leaders prevaricate, investors are growing increasingly concerned that the continent’s common currency could collapse, and that one or more countries could default on their debt, leading to another global economic crisis.
US and Europe risk double-dip recession, warns IMF.
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