IMF Cuts Outlook for World Economic Growth

The International Monetary Fund cut its forecast for world economic growth, saying that the economic recovery will slow as governments cut their budgets.

The IMF cut its outlook for the U.S. economy to 2.2% growth in 2011, from a previous estimate of 2.9%.

"The rate of expansion is beginning to moderate," the IMF said in its World Economic Outlook report. "Much of the weakness of this recovery is due to sluggish personal consumption."

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Elsewhere, the outlook is brighter. China is expected to grow by 9.6%, compared with 10.5% in 2010. Indian growth is expected to be around 8.4% in 2011.

The global economic recovery remains fragile, the IMF said.

"The financial sector is still vulnerable to shocks and growth appears to be slowing as policy stimulus wanes," in advanced economies, the report said.

The IMF also cited the possibility of a sovereign debt crisis "inflicting major damage on the recovery." Governments across the world have increased their debt levels as they upped spending to fight the economic slowdown.