Largarde says IMF to cut global growth forecast

July 6, 2012 - 6:37 AM
Japan IMF

IMF Managing Director Christine Lagarde speaks at a forum for the annual meetings of the IMF and World Bank Group at a Tokyo hotel Friday, July 6, 2012. Lagarde has praise for Japan's move to raise its sales tax to curb the swollen national debt. (AP Photo/Itsuo Inouye)

TOKYO (AP) — IMF Managing Director Christine Lagarde said Friday that the fund will cut its forecast for global economic growth in a quarterly assessment to be released later this month.

She did not say which nations or regions were contributing to the lowered assessment for 2012, characterizing it as "tilted to the downside" compared with the International Monetary Fund's 3.5 percent global growth projection given three months ago.

"In the IMF's updated assessment of the world economy, to be released 10 days from now, the global growth outlook will be somewhat less than we anticipated just three months ago. And even that lower projection will depend on the right policy actions being taken," she said in a speech Friday.

She declined to give more details.

"I am not going to give any number," she told reporters during a visit to Tokyo to meet with Prime Minister Yoshihiko Noda, other ministers and business leaders. "Tilted means that there is not an enormous variation, but it's a negative variation. And clearly certain regions of the world are more affected than others."

Growth in most major economies has showed signs of slowing in recent months, partly due to Europe's chronic debt crisis and economic malaise.

Lagarde praised Noda's effort to raise taxes to reduce Japan's debt burden.

She said raising the consumption tax has worked in other countries to reduce debt. Japan is about to pass legislation to double its sales tax to 10 percent by 2015.

Japan has one of the largest public debt burdens in the developed world but the tax proposal is highly unpopular here and has split the ruling party.

"It's certainly a very brave move," she said of Noda's policy.

Lagarde reiterated the IMF view that the yen is "moderately overvalued." A strong yen hurts exporting economies like Japan's, and businesses are complaining it is too high. The dollar is trading at about 80 yen lately.