Europe’s Hardships May Affect Global Economy

As Europe faces tough economic challenges, the International Monetary Fund has warned that these can directly affect world economy.

In the latest World Economic Outlook released last Monday, the report said the world economy remains weak as Europe tries to manage its debt crisis. Some developing countries are also not faring any better and this worries the IMF.

The international organization said it predicts a 3.5 percent global growth for 2012. This is slightly lower than its forecast three months ago. The IMF also stressed that if Europe’s debt crisis worsens, this could potentially pose a serious risk to the world.

The report added that the world economy did not show any signs of growth in the last three months.

The IMF also predicted that China would grow eight percent for 2012 and 8.5 percent for 2013. Although it did not give specific forecast for Australia’s economy, Treasurer Wayne Swan said he believes the economy remains stable.

Swan also said that the strength of the Australian economy should serve as an example to other economies. The IMF report should be motivate European leaders to implement changes in the fiscal and banking union, including making structural changes to cement growth and restore financial confidence.

The Treasurer also lauded the Australian economy, saying its growth remains impressive and that the signs show more promise. Low unemployment rates and managed inflation rates are just some of the positive signs seen in the economy.