IMF offers bleak assessment of world economy's stalled recovery

1. Wide of news conference 2. Various of media 3. SOUNDBITE: (English) Olivier Blanchard, International Monetary Fund's chief economist: "The world economic recovery continues, but it has weakened further. In advanced economies growth is now too low to make a substantial dent in unemployment and in major emerging markets, growth, which had been strong earlier, has also decreased." 4. Wide of news conference 5. Cutaway of cameras 6. SOUNDBITE: (English) Olivier Blanchard, International Monetary Fund's chief economist: "I think you can call it a general feeling of uncertainty about the future: worries about the ability of European policymakers to control the euro crisis; there are worries about the failure of US policymakers to agree so far on a fiscal plan; there are worries about the ability of the Japanese policymakers to reduce sufficiently their budget deficit, and all appear to play an important role in weighing on demand and again on growth, although it is difficult to nail down exactly what the strength of that effect is, but almost surely, it is there." 7. Cutaway of reporters 8. Wide of news conference 9. SOUNDBITE: (English) Olivier Blanchard, International Monetary Fund's chief economist: "Spain and Italy must follow through with adjustment plans which we established competitiveness and fiscal balance and maintain growth. To do so they must be able to recapitalise their banks if needed, without adding to their sovereign debt. And, fundamentally, they must be able to borrow at reasonable rates. Now most of these pieces are in the process of falling into place, and if the complex puzzle can be rapidly completed, one can reasonably hope that the worst is behind us." 10. Wide of news conference STORYLINE Plagued by uncertainty and fresh setbacks, the world economy has weakened further and will grow more slowly over the next year, the International Monetary Fund (IMF) has said in its latest forecast. Advanced economies are risking recession, the international lending organisation said in a quarterly update of its World Economic Outlook, and the malaise is spreading to more dynamic emerging economies such as China. "In advanced economies growth is now too low to make a substantial dent in unemployment and in major emerging markets, growth, which had been strong earlier, has also decreased," the IMF's chief economist Olivier Blanchard told a news conference in Tokyo. The IMF forecasts that the world economy will expand 3.3 percent this year, down from the estimate of 3.5 percent growth it issued in July. Its forecast for growth in 2013 is 3.6 percent, down from 3.9 percent three months ago and 4.1 percent in April. Underpinning that bleaker scenario are the assumptions that Europe will continue to ease monetary policy and that the US will avert a crushing blow to growth by fending off a so-called "fiscal cliff" that could result from a failure to reach a compromise on its budget law and tax cuts. Blanchard said there was "a general feeling of uncertainty about the future". "(There are) worries about the ability of European policymakers to control the euro crisis; there are worries about the failure of US policymakers to agree so far on a fiscal plan; there are worries about the ability of the Japanese policymakers to reduce sufficiently their budget deficit, and all appear to play an important role in weighing on demand and again on growth," he said. Global efforts to ease credit and increase the amount of money available for lending are helping, but appear to be yielding diminishing returns, as are fiscal stimulus policies, the IMF warned. "Spain and Italy must follow through with adjustment plans (in) which we established competitiveness and fiscal balance and maintain growth," said Blanchard. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/1d8d5c7e251b51cac225332e037d0d83 Find out more about AP Archive: http://www.aparchive.com/HowWeWork