IMF Lowers 2013 Global Growth Forecast

The International Monetary Fund (IMF), yesterday  lowered its 2013 global growth forecast to 3.9 percent from 4.1 percent.

The IMF’s world economic outlook released overnight, also revised down marginally its predicted global growth to 3.5 per cent this year.

The report warned that the forecasts were based on assumptions that the euro zone recovery will gradually ease the continent’s recession, and that the United States (US) can solve its political impasse on tax cuts and policy easing in China will gain traction

Without those outcomes the global economy could weaken further, the report warns.

Business day in its analysis of the global economy, warned about the deflationary signals Bond yields on US Treasuries (which are seen as a safe haven) were sending.

This is because when bond yields fall, they are signaling that investors are risk averse and would rather invest in low yielding bonds, than in other asset classes such as equities and commodities, which tend to outperform when the global economy is expanding.