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IMF trims forecast for global economic growth

By WTOP Staff

CHRISTOPHER S. RUGABER
AP Economics Writer

WASHINGTON (AP) — The International Monetary Fund slightly lowered its outlook for global economic growth this year and next, mostly because of weaker expansions in Japan, Latin America and Europe.

The IMF said Tuesday the global economy will grow 3.3 percent this year, one-tenth of a point below what it forecast in July. World growth should then pick up to 3.8 percent in 2015, two-tenths of a point lower than its previous estimate, the IMF said in the latest installment of its World Economic Outlook.

The global lending organization has a more optimistic view of the U.S. economy, which it expects will grow 2.2 percent this year, up from an earlier forecast of 1.7 percent. Its forecast for 3.1 percent growth in the U.S. next year was unchanged.

Still, the global lending organization warned that the U.S., Europe and Japan could face years of sluggish growth unless governments take steps to accelerate activity. It acknowledged that it has frequently cut its forecasts in the past several years, and said that was partly because of slower long-run growth in advanced economies.

“The recovery continues, but it is weak and it is uneven,” Olivier Blanchard, chief economist at the IMF, said at a press conference.

Blanchard warned that low interest rates have made investors “too complacent” in the advanced economies, particularly about the uncertainty around interest rates in the U.S. That could trigger sharp falls in financial markets, especially if rates rise faster than expected.

U.S. Treasury Secretary Jacob Lew had stronger words for the rest of the world. While the U.S. took decisive steps after the 2008 financial crisis to bolster its economy, other nations haven’t been as aggressive to solve their own economic problems, he said Tuesday.

“I don’t think the United States alone can pull the global economy to where it needs to be,” Lew said during an appearance at the Peterson Institute for International Economics.

IMF’s Blanchard also cited turmoil in the Ukraine and Middle East as risks to global growth, though for now the economic impact is limited to the countries involved. The IMF forecasts that Russia’s economy will be brought to a near-standstill by sanctions and falling confidence among international investors.

The IMF forecasts that growth in the 18 countries that use the euro will be just 0.8 percent this year, down from 1.1 percent in its July forecast. It lowered its 2015 projection to 1.3 percent from 1.5 percent.

Japan will grow just 0.9 percent in 2014, the fund said, down from the 1.6 percent pace the IMF previously projected. It sees Japan’s growth slipping to 0.8 percent in 2015, down from its July estimate of 1 percent. The world’s No. 3 economy has slowed after a large sales tax took effect this spring.

It left its forecasts for China unchanged at 7.4 percent this year and 7.1 percent in 2015. While those figures would be healthy for most nations, they represent the slowest growth for China in decades.

The fund also sharply cut its forecast for Latin America and the Caribbean, which it now expects to grow just 1.3 percent in 2014, down from a July estimate of 2 percent. Growth will be 2.2 percent in 2015, down from 2.6 percent. The figures largely reflect weakness in Brazil.

The report is being released ahead of this weekend’s annual joint meetings of the IMF and World Bank in Washington.

The IMF urged the United States, Europe and Japan to keep interest rates low to spur more borrowing, spending and growth. The European Central Bank should also consider buying government bonds if needed to avoid deflation, the report said.

The fund also said the U.S. and Europe should benefit from fewer tax increases and spending cuts in 2014 than in previous years. The report predicts that the U.S. Federal Reserve will hold off raising interest rates until the middle of next year.

But aging populations and lower productivity threaten to lower long-run growth in advanced economies, including the U.S. but “especially (Europe) and Japan,” the IMF said.

To counter those trends, governments should consider spending more on infrastructure, education and job training, the IMF added.

___

AP Economics Writer Martin Crutsinger contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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