The ongoing eurozone debt crisis and political uncertainty in the US as it struggles to rein in its deficit will hit growth in the world economy, a new International Monetary Fund report has warned.
he fund, which already downgraded its forecast for Ireland earlier this month, said international problems like the European debt crisis, higher oil prices and the Japanese earthquake and tsunami are weighing down growth prospects.
In its latest biannual forecast, it said the world economy will grow by 4pc this year compared with an earlier 4.5pc prediction.
It added that Ireland will continue suffer from the effects of the eurozone debt crisis with the export market taking a hit.
Withdrawal of economic stimulus by individual governments as austerity packages hit will also hit growth.
It expects growth of 1.6pc this year for advanced economies, down from the 2.2pc forecast in June, with a figure of 1.9pc penciled in for next year.
All of its predictions are subject to risk.
“Financial stability risks have once again increased dramatically,” it said.
The key drivers of growth will be a recovery in the Japanese economy, a lowering of oil prices and strong investment backed by corporate profits.
And emerging markets are predicted to grow more rapidly.