Lagarde says IMF to cut global growth forecast

IMF managing director Christine Lagarde said on 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, characterising it as "tilted to the downside" compared with the International Monetary Fund's 3.5% 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 on 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 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.

"In the last few months, the global outlook has been more worrying for Europe, the United States and large emerging markets," Lagarde said. "The IMF's forecasts are likely to be lower than our previous forecasts."

The IMF will publish an update to its World Economic Outlook report on July 16.

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% 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.

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