Looks like the rich world blues will get worse this year

The rich man’s curse is hanging like the Damocles’ sword over world growth prospects. In a recent revision of the global economic outlook, the International Monetary Fund (IMF) has kept the overall growth story largely intact, but some of the biggest economies are predicted to fare worse than before.

Among them: the US, the UK, Japan, and Italy. Counter-balancing this somewhat are improved prospects at the heart of Europe - Germany and France - but this is not enough since the weight of the losers is much higher than that of the gainers.

That is the good news. The bad news is that the US economy - which accounts for a quarter of global GDP - will see another decline in 2012 as well.

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[caption id=“attachment_28570” align=“alignleft” width=“380” caption=“The US economy, which accounts for a quarter of global GDP, will see another decline in 2012.Spencer Platt/Getty Images”]  [/caption]

Of the eight developed economies for which the IMF has provided revised forecasts, four are now expected to show lower growth in 2011 than it had earlier forecast, while the remaining will show positive to unchanged growth.

The steepest downward revision is for Japan, where growth is expected to decline by a whole 2.1 percentage points from an already weak initial forecast. Reason: the earthquake and tsunami have had a strongly negative impact on the overall economy.

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Interestingly, the Japanese tragedy has not just impacted its domestic economy. The IMF has also pointed to the “supply chain disruptions from the Japanese earthquake on US manufacturing”. As a result, US growth is expected to decline by 0.3 percentage points.

Italy and the United Kingdom are the other two developed economies which are expected to show softer growth than initially forecast.

Despite the difficulties of the eurozone at large, though, Germany and France are now expected to see much stronger growth, while Spain’s growth forecast remains unchanged. Canada, too, has seen a small upward revision.

However, the overall picture for the developed world still looks lacklustre since US, Japan, Italy and UK together have a larger share in global GDP of as much as 39% at current prices. The corresponding share for the remaining four is a much smaller 14% by comparison.

The IMF has also revised the growth prospects for some countries for 2012, notable among which is Japan, while the US’s growth has been revised down further.