Global economy in a dangerous phase: IMF

Portraying a gloomy outlook for the global economy, International Monetary Fund (IMF) today said that it is in a dangerous phase as business activity has weakened and confidence has fallen sharply.

Global growth will moderate to about 4 per cent through 2012, from over 5 per cent in 2010, IMF said in the World Economic Outlook report released today.

"The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing," the IMF said ahead of its annual meeting here this week.

It noted that the structural problems facing crisis-hit advanced economies have proven even more intractable than expected, and the process of devising and implementing reforms even more complicated.

The report said the outlook for these economies is, thus, for a continuing, but weak and bumpy expansion.

"Prospects for emerging market economies have become more uncertain again, although growth is expected to remain fairly robust, especially in economies that can counter the effect on output of weaker foreign demand with less policy tightening," it said.

Real GDP in the advanced economies is projected to expand at an anaemic pace of about 1.5 per cent in 2011 and 2 per cent in 2012, helped by a gradual unwinding of the temporary forces that have held back activity during much of the second quarter of 2011, IMF said.