IMF downgrades UK economic growth

The International Monetary Fund (IMF) has warned of risks facing the world economy.

However, on a positive note, it maintained its global growth forecasts, expecting the world economy to grow at a rate of 4.3% this year and 4.5% in 2012.

In its World Economic Outlook, it upgraded its growth forecast for Germany from 2.5% to 3.2% after recent growth has exceeded expectations.

It also lifted its growth forecasts for France and Eastern Europe.

However, it has downgraded its forecast for the UK to 1.5% from 1.7%, while also lowering its forecast for the US from 2.7% to 2.5% in 2011.

Furthermore, it expects growth in Japan to be lower, after March’s earthquake and tsunami pushed the economy back into recession.

In the meantime, the IMF said the global economy faces increased risks due to the ongoing debt crisis in Greece and disputes over the US deficit.

It warned that the Greek debt crisis could destabilise the global financial system and if it is unable to repay its debts, weaker nations such as Spain and Portugal would be affected.

It is therefore urging European leaders to establish long-term policies to prevent further problems.

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