Global economic growth forecast could go down - Kudrin
MOSCOW. Oct 18 (Interfax) - The forecast for global economic growth could be further adjusted downward, said International Guild of Financiers President Alexei Kudrin.
"Forecasts are dropping. At the last IMF meeting that I attended we discussed the global economic growth forecast dropping to 4% from 4.4% and the forecast for the U.S. economy was lowered to 1.5% from 2.8%. The forecasts are also going down for 2012. Initially the IMF forecast was 4.5% and now it is 4%. I think, we may see new corrections," Kudrin said at the Moscow International Finance Week conference.
The first wave of crisis was rather unexpected and deep and most economists were unable to predict it, he said. "Now we are moving to the next phase of the crisis that began earlier, which may be unique and the task is to target business and understand what needs to be done," he said.
G20 Finance Ministers met last week, EU countries will meet at the end of this week and G20 leaders will meet on November 3-4 in Cannes, he said. A plan of action is being prepared to ensure balanced and stable growth, he said.
"We welcome the expansion to 75 billion euros of the EU financial stability instrument and consider this to be very important, we welcome the package of documents that is being put together, especially regarding financial regulation," Kudrin said. At the same time the forecasts for economic growth are going down, he added.
A possible correction in the forecasts is associated primarily with key, global imbalances that have developed in the global economy, especially the reduced opportunities for fiscal stimulation of the economy. "We may come across a new branch of the crisis, which will be characterized by sovereign debt crisis and that will be a completely new situation on international markets as even reliable shelters for capital, as provided by sovereign bonds, are now becoming risky," he said.
Long-term strong budget consolidation programs are needed, Kudrin said.
"We need to understand that for some time debts will continue to accumulate, despite the fact that we are already seeing considerable difficulty in servicing them," Kudrin said.
