The World Economy... - 9/7/2010

IMF Raised 2010 Economic Growth Estimate, Sees Recovery Risk

The International Monetary Fund (IMF) raised its forecast for global economic growth to 4.6% in 2010, from +4.2% projected in April and compared with -0.6% in 2009. This was the strongest growth since 2007, on account of a strongerthan- expected growth in the 1H of the year, but IMF warned that financial-market turmoil has increased the risks to the recovery. For 2011, growth is projected to be +4.3%, unchanged from the April forecast. The IMF expects advanced economies to grow 2.6% in 2010, faster than +2.3% projected in April. This is on account of an upgrade in the US real GDP growth forecast to +3.3% in 2010, from +3.1% predicted in April but growth will slow down to +2.9% in 2011. Japan’s real GDP will increase by 2.4% in 2010, more than the +1.9% forecast in April, before slowing down to +1.8% in 2011. The IMF, however, kept the Euroland’s economy forecast for 2010 unchanged at 1.0% and reduced its 2011 outlook by 0.2 percentage point to 1.3%, in tandem with austerity measures undertaken by the countries in the region. Europe’s debt crisis, which policymakers sought to contain with an emergency €750bn (US$949bn) aid programme, prompted Group of 20 (G20) leaders to commit to deficit- and debt-reduction goals over the next six years in June. As a result, advanced G20 economies will try to halve deficits by 2013 and start to stabilise their debt-to-GDP ratios by 2016.

The World Economy... - 9/7/2010