The International Monetary Fund says the world is recovering faster than expected from the global financial crisis.
The IMF raised its 2010 world growth forecast to 4.6% from 4.1% in April, with much of the increase coming from strong expansions in Asia and rising U.S. demand.
But, the International Monetary Fund’s quarterly report warns of risks, primarily coming from Europe. The IMF says eurozone countries need to take action to stabilize their financial systems and reduce their sovereign debt. The IMF argues that doubts over government finances especially in Greece and other European countries heavily in debt could spill over to other regions and stall the global recovery. Weak data from major economies in recent weeks have diminished confidence in a strong rebound from last year’s recession .although a global ‘double dip’, or relapse into recession, is ‘very unlikely’, Mr Blanchard said.
Some economists, however, see an additional risk in China, because of concerns its high-flying property market could crash.
The IMF raised its 2010 growth forecast for China to 10.5% from 10%, for Japan to 2.4% from 1.9% and for India to 9.4% from 8.8%.
It expects the United States economy to expand by 3.3%, up from 3.1%. The forecast for the eurozone countries remains flat at 1%.
Sub-Saharan Africa should see growth of about 5%, and Brazil could see growth top 7% this year.
The five key South-east Asian economies of Indonesia, Malaysia, the Philippines, Thailand and Vietnam were expected to grow by an average 6.4% this year and 5.5% next year.
For 2011, however, the IMF expects the world will see slightly slower growth, in part because stimulus packages created in 2008 to reduce the damage from the financial crisis will start to end. As a result, it is maintaining its April forecast for global growth at 4.3%. In one of the biggest downgrades it has made to any developed economy, the IMF lowered its 2011 growth forecast for Britain from 2.5% to 2.1%.
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