The International Monetary Fund said Tuesday that it sees slower global growth in 2013 and 2014 than it did just three months ago, citing expectations of a slowdown in key developing countries such as China and Brazil and a more protracted recession in Europe.
The international lending agency released an update of its World Economic Outlook issued in April, projecting the world economy will grow at 3.1 percent this year, down from a 3.3 forecast three months ago. The 2014 projection was cut to 3.8 percent from 4.0 percent.
"The world economy remains in a three-speed mode," said Olivier Blanchard, IMF director of research. "Emerging markets are still growing rapidly. The U.S. recovery is steady, but much of Europe continues to struggle," he told a news conference in Washington, where the IMF is based.
Blanchard said growth almost everywhere is a bit weaker than forecast in April, but downward revisions are particularly noticeable in developing countries.
The IMF said the possibility of a more drawn-out slowdown in developing countries is a new risk that has emerged since April. Blanchard noted a clear downward trend in China, Russia, Brazil and India and attributed it to slowdowns in domestic demand and consumption but also to weaker exports because of sluggishness in advanced economies.
China's 2013 forecast was scaled back to 7.8 compared to 8.1 in April. For 2014 it fell to 7.7 from 8.3 percent.
"My impression is the country where there is the largest risk in terms of large decrease in growth is China," said Blanchard.
The U.S. economy also looks weaker than previously expected, the IMF said, citing tight fiscal and financial conditions.