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IMF sees faster global growth, eurozone risk

Posted by: AFP, Uploaded: 25th January 2011



The International Monetary Fund said Tuesday the global economic recovery was gaining traction, but highlighted risks from the eurozone financial crisis.

The IMF said the two-speed global recovery with advanced economies growing significantly more modestly than emerging economies was shifting gears as economic powers the United States and Japan saw rising consumption.

“In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks,” the IMF said in an update of its world economic forecasts.

The Washington-based institution released the latest updates in Johannesburg, South Africa, where top IMF officials were set to hold a news conference.

The IMF projected the global economy’s output would expand by 4.4 percent in 2011.

That slightly higher than 4.2 percent annual rate projected in the fund’s October projection.

“This reflects stronger-than-expected activity in the second half of 2010 as well as new policy initiatives in the United States that will boost activity this year,” it said.

The annual pace, however, would still be slower than the 5.0 percent seen in 2010.

The IMF said a new US fiscal package passed in late 2010 was expected to boost growth in the world’s biggest economy by 0.5 percent.

The US economy had the sharpest markup by far: a 0.7 point gain to GDP growth of 3.0 percent in 2011.

There was no change in the 1.5 percent growth forecast for the 17-nation eurozone or for Japan, where 1.5 percent growth is predicted.

Meanwhile for emerging economies, growth remained “buoyant” but inflation pressures were emerging and there were signs of overheating in part from capital inflows as investors chased higher yields.

Growth in the top two Asian engines, China and India, was unrevised at 9.6 percent and 8.4 percent, respectively.

Sub-Saharan Africa is predicted to produce the strongest growth of any region, at 5.8 percent.

But the IMF warned of risks from the financial and debt crises in peripheral eurozone countries, such as Greece and Ireland, and tepid progress in financial reforms.

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Story first published: 25th January 2011




 
 
 

 
 


 

 






 
 

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