The International Monetary Fund has made major cuts in its growth forecasts for the United States, Japan and the euro zone, a German government source said today.
The European Commission also cut its US growth forecast for 2001, to 1.6 per cent from 3.3 per cent. It predicted a sharp rebound in 2002 to 3 per cent but said downside risks to this recovery scenario had increased.
But the IMF and Brussels were hopeful of a rebound in the United States next year to bring the global economy back on a more favourable growth track.
According to the German source, the IMF report due for publication tomorrowcuts its US growth forecast in 2001 to 1.5 per cent from the 3.2 per cent it predicted last September but it anticipated a rise to 2.5 percent growth next year.
The IMF cut its forecast for euro zone growth to 2.4 per cent from 3.4 per cent and predicted growth of 2.8 per cent in 2002, the German government source said.
The IMF forecast for the region is more pessimistic than the European Commission, which cut its forecast for euro area GDP this year to 2.8 per cent from a previous 3.2 per cent. It predicted growth rebounding to 2.9 per cent in 2002.