IMF warns of increased risks to the world economy |The International Monetary Fund has warned that the risks facing the world economy have increased.

The fund said it was concerned about the continuing Greek debt crisis, the arguments over US deficit plans and the need to curb growth in Asia.

But it said it expected global growth to remain on track, though it lowered its forecasts for the US and UK.

The IMF predicted that the world economy would grow at a rate of 4.3% in 2011 and 4.5% in 2012.

The fund called for greater political leadership in dealing with the eurozone debt crisis and the budget crisis in the US.



"You cannot afford to have a world economy where these important decisions are postponed, because you're really playing with fire," said Jose Vinals, director of the IMF monetary and capital markets department.

The IMF's latest forecasts came as it updated its assessments of financial stability, country finances and the global economy. Its last review was in April.

US and Japan

Japan is struggling to cut its spending in the aftermath of the earthquake and tsunami.
In the US, the fund highlighted the "political stalemate" over how to tackle the deficit.
The fund lowered its growth forecasts for the US for the next two years from 2.7% to 2.5% in 2011 and from 2.9% to 2.7% in 2012, and it also highlighted renewed weakness in the housing market as a risk.
Economic growth

In the so-called "core" European countries, such as France and Germany, growth has exceeded expectations.

The IMF raised its 2011 growth forecast for Germany to 3.2% from 2.5%.

This may help to mitigate some of the problems faced by other countries in the eurozone.

The fund pushed up its 2011 forecast for the eurozone as a whole to 2% from 1.6%.
A man looks at some model flats There are worries the Chinese property market may be overheating

In the UK, the fund downgraded its growth forecast for 2011 to 1.5% from 1.7%.

However, it endorsed efforts to cut the deficit, describing the plans as "on track".

Outside Europe, the fund said it expected economic growth in developing countries to remain strong.

This, in turn, presents a risk of overheating - where economies grow too fast leading to a rapid contraction later.

"Too much capital may be moving too quickly to emerging markets," the IMF warned, pointing to higher inflation in some countries.

Property prices in China have also risen sharply posing the risk of a sharp downturn.

The three IMF reports highlight the uncertainty over the economic outlook

UBS's Mr Magnus said: "The standard [IMF] economic forecast is based on all sorts of assumptions, but that is the point. We are being treated to a succession of random and extreme events, which are difficult to predict."