WASHINGTON Feb 28 The International Monetary
Fund said Thursday it will likely cut its growth forecasts for
the United States and the global economy if automatic U.S.
spending cuts take effect on Friday, and warned that the U.S.'s
biggest trading partners would be hardest hit.
IMF spokesman William Murray said that if the cuts are fully
implemented, the IMF would likely shave at least 0.5 percentage
point off its current forecast of 2 percent growth for the U.S.
"We will see what happens on Friday, but everybody is
assuming that sequestration is going to take effect," Murray
said at a regular news briefing. "What it means is that we are
going to have to reevaluate our growth forecasts for the United
States and other forecasts."
The IMF's warning about the impact of the spending cuts on
the U.S. and the rest of the world comes as Europe continues to
struggle with the effects of a debt crisis and as growth has
slowed in emerging economies like China, India and Brazil.
President Barack Obama and Republican congressional leaders
have yet to reach a deal to avert $85 billion worth of spending
The revised IMF forecasts will be reflected in the Fund's
World Economic Outlook due out in mid-April. The IMF's last
batch of forecasts in January put global growth at 3.5 percent
this year, increasing to 4.1 percent next year.
The Fund has long urged the United States, the world's
biggest economy and a key trading partner of other economic
giants, to reach a deal to avoid sharp spending cuts that could
destabilize a fragile global economic recovery and possibly
disrupt financial markets.
"Certainly 2013 will be affected," Murray said, "We have to
see how far this sequestration is implemented, I don't think
that is clear to anybody ... because it isn't an immediate
implementation of all spending cuts and we have to see how that
political process plays out."