Global GDP Must Climb Capitol Hill
[Financial Analysis and Commentary]</br></br>Taper talk served up an unpleasant reminder for many emerging markets: Their fates are often hostage to the whim of the U.S. Federal Reserve.</br></br>While the Fed's focus is on the U.S., its actions reverberate globally. That is due in large part to the role of the U.S. dollar as the world's reserve currency and emerging-market economies' dependence on it.</br></br>So the Fed's talk in May of scaling back bond purchases pushed long-term interest rates higher and sucked funds out of emerging markets. That helped reduce the growth outlook for many, as shown Tuesday by the International Monetary Fund's latest World Economic Outlook.</br></br>The IMF cut its global growth forecast for 2013 by 0.3 percentage point to 2.9%, and for the following year by 0.2 percentage point to 3.6%. This was driven in part by reduced expectations for emerging markets, in particular, India.