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IMF to cut global growth outlook

The International Monetary Fund (IMF) would lower its assessment of the world economy in 2012, Managing Director Christine Lagarde said Friday.

The global growth outlook “has become more worrisome,” Lagarde said in Tokyo.

“Many indicators of economic activity - investment, employment, manufacturing - have deteriorated and not just in Europe or the United States,” she said. “Also in key emerging markets: Brazil, China, India.”

The announcement would be made in 10 days, she said.

In April, the IMF revised upwards its forecast to 3.5 per cent from the 3.3 per cent it projected in January.

Lagarde said advanced economies must deal with the issue of public debt but warned such reductions should not be so deep as to undermine economic turnarounds. She said she was particularly concerned about the US.

The US, she said, “must do all it can to avoid driving over what some have described as the 'fiscal cliff.'“

“This refers to the expiring tax cuts and automatic spending reductions that are legislated to begin next year and which would abruptly shrink the budget by some 4 per cent,” she said. “This would jeopardize not only the US recovery but the global recovery.”

Japanese Prime Minister Yoshihiko Noda told Lagarde during her visit that his country is concerned about the “one-sided appreciation of the yen,” which has negatively affected Japan's nascent economic recovery from last year's earthquake and tsunami.

Lagarde is visiting Tokyo as part of preparations for the general meetings of the IMF and World Bank there in October. -Sapa-dpa

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