9 Oct 2013

US Government default could do serious damage to global economy-IMF

3:05 pm on 9 October 2013

The International Monetary Fund has warned that a US Government default could seriously damage the world economy.

But the IMF is sceptical about whether it will come to that.

However the political face-off continued in Washington on Wednesday morning with President Obama telling Republicans the world risks a recession if the US defaults on its debt.

Mr Obama urged the House Speaker, the Republican John Boehner to hold a simple vote to end the government shutdown and raise the nation's debt limit, saying international creditors look to Congress for reassurance about US creditworthiness.

But Mr Boehner responded by holding his own news conference, saying

it was unsustainable for President Obama to keep rebuffing Republican demands to negotiate deficit reduction in exchange for raising the debt limit and restoring government funding.

Mr Obama said earlier he wouldn't give in to extortion but he would be willing to talk with the speaker once Congress reopens the government and raises the debt limit.

IMF cuts global outlook

And the IMF has cut its global outlook for this year.

The fund has downgraded its forecast for global growth to 2.9% for 2013, down a third of a percentage point from its July forecast.

It has cut the outlook for next year to 3.6% from 3.8%.