Crisis to take much heavier toll on Greece than expected, IMF says

Global economic growth will be lower than previously expected the world’s financial watchdog said.

“The projected pickup in global growth, while still expected, has not yet firmly materialized,” the International Monetary Fund said in its latest World Economic Outlook.

“Raising actual and potential output through a combination of demand support and structural reforms continues to be the economic policy priority.”

Following a weak first quarter in the US the IMF took its forecast for the rate of growth in the world’s gross domestic product in 2015 down a peg, to 3.3% from the 3.5% seen in April.

That would also mark a slight slowdown from the 3.4% pace achieved in 2014.

However, its forecast for a 3.8% rate of expansion in 2016 was maintained.

“unfolding developments in Greece were likely to take a much heavier toll"

The Washington-based lender’s latest stab at predicting how much the US economy will grow this year is 2.5%, down from the 3.1% it predicted in April.

On the subject of Greece, the fund’s economists said “unfolding developments were likely to take a much heavier toll on activity relative to earlier expectations.”

The Eurozone was still seen growing 1.5% in 2015 and emerging market economies by 4.1%, one tenth of a percentage point less than previously estimated.

The call for Chinese GDP growth in 2015 was kept at 6.8% but economic activity in Brazil was now expected to shrink by 1.5%, instead of by 1%.

Nonetheless, “greater difficulties in China’s transition to a new growth model, as illustrated by the recent financial market turbulence,” the IMF said.