In its most recent World Economic Outlook, the International Monetary Fund (IMF) warned US and European policymakers that failure to fix their economic woes would prolong the slump, as it cut its global growth forecasts for the second time since April.

The IMF revised its expected growth forecast for this year to 3.3 per cent, from its July estimate of 3.5 per cent, with Asia still leading the pack of expanding regions while Europe contracts by an expected 0.4 per cent.

The IMF said the global economic slowdown is worsening, with growth in developed economies being too feeble to reduce unemployment and what little momentum exists is coming primarily from central bank intervention.

In Europe, burdened by the sovereign debt crisis and as companies scaled back investment, German industrial production fell in August. Indeed, the Economy Ministry reported a drop in production of 0.5 per cent from July, when it increased by 1.2 per cent.

According to a Bloomberg News survey, economists had forecasted a 0.6 per cent drop. Compared with the same month last year, production, adjusted for working days, fell by 1.4 per cent.

The latest data shows that Europe’s largest economy is cooling as the debt crisis forces governments, companies and consumers across the region to reduce spending. According to the same report, factory orders dropped 1.3 per cent in August. At the same time, exports to nations outside the eurozone and record low unemployment are helping to limit the slowdown.

Finally, on the other side of the Atlantic, according to data published by the Labour Department, the US economy added 114,000 workers in September after a revised 142,000 rise in August. At the same time, the jobless rate dropped to 7.8 per cent from 8.1 per cent.

This is the lowest rate since President Barack Obama took office in January 2009, giving his re-election campaign a boost a month before the election. The unemployment rate had been stuck above eight per cent since February 2009, the longest stretch since monthly jobless figures were first compiled in 1948.

This report was compiled by Bank of Valletta plc for general information purposes only.