IMF cuts Korean growth outlook to 2.7 pct. this year

The International Monetary Fund has offered a bleak outlook on the global economy and cut its growth forecast for Korea to 2.7 percent from 3 percent.

The Organization for Economic Cooperation and Development and the World Bank are also offered gloomy views of the world economy due to considerable downside risks.

In its quarterly update of its World Economic Outlook released Tuesday, the IMF said global economic uncertainty remains high due to the continued eurozone debt crisis. The IMF cut the world`s GDP growth forecast to 3.6 percent for next year from its initial forecast of 3.9 percent.

Underpinning the bleaker scenario was the assumptions that Europe will continue easing monetary policy and that the U.S. will avert a crushing blow to growth by fending off a so-called fiscal cliff. "Conditions could worsen if the U.S. doesn`t deal with its budget crisis soon," the IMF said.

It forecasted that the world economy will grow 3.3 percent this year, down from an earlier estimate of 3.5 percent. The BRIC economies of Brazil, Russia, India and China are expected to suffer a huge setback.

China will likely see growth of 7.8 percent this year, down from the initial projection of 8 percent. India`s economy will rise 4.9 percent, down from 6.1 percent. Brazil`s will go up just 1.5 percent, down from an earlier estimate of 2.5 percent, and Russia`s will expand 3.8 percent, down from 3.9 percent. The fund forecast growth in the eurozone area will drop 0.4 percent this year and tick up 0.2 percent next year.

The OECD and the World Bank also presented bleak views for the world economy. The OECD said Monday that the composite leading index of 34 member states was 110.1 in August, down 0.1 point from the previous month. The index gauges industrial production, housing, financial and monetary trends and GDP six months ahead. A reading below 100 points means an economic slowdown. The index for the eurozone was 99.4 in August, down from 99.5 of the previous month.

The World Bank on Monday slashed its 2012 growth forecast for East Asia and the Pacific to 7.2 percent, down from its May outlook of 7.6 percent. It cut next year`s forecast for the region to 7.6 percent from 8 percent.

ryu@donga.com