IMF sees new global economic peril
Tuesday, July 17, 2012 at 12:15PM An economic slowdown in China and other major developing countries has pulled one of the few remaining props from the world economy, which is already threatened by the financial crisis in Europe and a sluggish U.S. growth.
Strong growth among developing countries, particularly the so-called “BRIC” nations — Brazil, Russia, India and China — as well as Mexico and South Africa, had been a bright spot in an otherwise tepid world recovery.
No longer.
Growth is now slowing among those nations as well. And for a variety of reasons, they may not be able to respond with the same intensity as they did after the U.S. financial collapse in 2008, when they pumped hundreds of billions of dollars into government projects and other measures to stimulate their economies.
Those efforts kept their own economies on track and helped ease the recession in the developed world by boosting the demand for exports from countries such as the United States. Sales to China from the United States, for example, jumped more than 80 percent between the first months of 2009 and the first months of 2012.
That rapid run-up is losing steam, prompting the International Monetary Fund on Monday to trim its forecasts for global growth and warn that worse problems may be in the offing.
This could also spell a further drag on the U.S. economy, which is struggling with an 8.5 percent unemployment rate.
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