IMF updates global economic forecast with brown ink

The International Monetary Fund has reduced its global economic growth forecast for 2013 by 0.2% to 3.3%, and retained the same 4% growth forecast for 2014.  They also expected 2013 US GDP growth to be 1.9%.  These forecasts are too optimistic and are written in brown ink.  We’re a third of the way through the year, and the IMF (with a cadre of PhD Economists) see +1.9% this year and 3% next year.

Here’s my 2013 quarter by quarter forecast: +2%, -0.5%, -1%, -2%.  A -0.75% 2013 US GDP forecast.  For 2014: -2.75%. This assumes the current speed of monetary easing continues until year end, then is stopped or cut back considerably in 2014.

The IMF was patting major advanced economies on the back for cutting fiscal deficits from a 9% average in 2009, to a forecast 4.7% in 2013. I don’t see 4.7% being hit this year, but 5 – 5.5% is possible. Whatever low hanging fruit their was has now long since been picked. It will be harder to close the fiscal deficits from 5% to 3% over the next few years.

The IMF apparently indicated it is still concerned about economic problems in: the US, UK, France, Italy, Spain, and of course Japan.