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IMF shaves global forecast for growth, again

The International Monetary Fund has cut its global forecast for growth. The predictions, it said, came on the back of a slowdown in the world’s emerging nations and poor economic performance in the eurozone.

The Washington-based IMF said on Tuesday it was trimming its forecast for the fifth time since early last year.

The organization reduced its projected growth for 2014 to 3.1 percent, from a forecast of 3.3 percent published in April this year.

"The world economy remains in a three-speed mode," said Olivier Blanchard, the IMF's chief economist. "Emerging markets are still growing rapidly. The US recovery is steady, but much of Europe continues to struggle."

Growth estimates have fallen in every prediction that the fund has made since April 2012. The organization had predicted then that the world economy would expand by as much as 4.1 percent this year.

The fund also lowered its forecast for 2014 to 3.8 percent, an amendment from its earlier prediction of 4 percent expansion.

BRICS face obstacles to progress

In its update of the World Economic Outlook report - entitled "Growing Pains" - the IMF said emerging markets, seen as the engine of global growth, had added to the subdued outlook despite appearing relatively healthy compared with other parts of the world.

The fund cuts its combined growth prediction for Brazil, Russia, India, China and South Africa - known as the BRICS - to 5 percent. China was seen as particularly problematic, with too little investment and consumption at present.

"After years of strong growth, the BRICS are beginning to run into speed bumps," said Blanchard. "This has an important implication: that growth in emerging markets will remain high, but maybe substantially lower than it was before the crisis."

The IMF said it expected the eurozone to remain in recession this year, with the currency bloc's economy contracting 0.6 by percent. A slight recovery, with expansion of just under 1 percent, was predicted for next year.

rc/jm (AP, Reuters)