The IMF projects global growth to drop from close to 4 percent in 2011 to about 3.5 percent this year, increasing to 4.1 percent next year:
Outlook Slowly Improving but Remains Fragile: Prospects for the global economy are slowly improving again, but growth is expected to be weak, especially in Europe, and unemployment in many advanced economies will stay high, according to the IMF’s latest forecast.
Although action by policymakers in Europe and elsewhere has helped to reduce vulnerabilities, risks of a renewed upsurge of the crisis in Europe continue to loom large, along with geopolitical uncertainties affecting the oil market.
Real GDP growth should pick up gradually during 2012-13 from a trough seen in the first quarter of 2012, with signs of improvement in the United States, and the emerging economies remaining supportive. The IMF raised its projection for the United States to 2.1 percent this year and 2.4 percent next year from 1.7 percent in 2011. It has also slightly improved its forecast for the euro area compared with January. But it still projects a mild contraction in the euro area, where concerns about high sovereign debt and fiscal consolidation have taken a toll, although Germany and France might see positive growth...
Outlook by Region:
North America. U.S. economic growth is projected at 2.1 percent in 2012 and 2½ percent next year, reflecting ongoing fiscal consolidation and continued weakness in housing prices. In Canada, growth will moderate slightly to close to 2 percent.
Europe. Real GDP in the euro area is projected to contract in the first half of 2012 but then start recovering, except in Spain, Italy, Greece, andPortugal where recovery will only begin in 2013. Many advanced economies outside the euro area avoided large precrisis imbalances, which helped cushion the spillovers from the euro area. But in the United Kingdom, whose financial sector was hit hard by the global crisis, growth will be weak in early 2012. Growth in emerging Europe is projected to slow sharply to 1.9 percent this year, reflecting its strong economic and financial linkages with the euro area. Europe as a whole will see projected growth of 0.2 percent in 2012 and 1.4 percent next year.
Mediocre Growth, High Risks, and The Long Road Ahead - Olivier Blanchard