IMF Forecast:Slow Recovery For The World Economy

According to the International Monetary Fund (IMF), in its global economic outlook  report released today, a global recovery is underway, but likely to be slow or even sluggish in part of the world. The IMF projects that the global economy will rise by 3.1 percent next year, and attributes this likely rebound to China and India.

After a deep recession, global economic growth has turned positive, driven by wide ranging coordinated public intervention that has supported demand, reduced uncertainty  and systemic risk in the financial markets, according to the IMF’s report on the global economy.

The International Monetary Fund forecasts the following:

1- China, India and other emerging Asian economies will be the motor for expansion, as domestic stimulus spur demand. But Russia and other East-European countries face a difficult path.

2- The Middle-East and Africa are expected to post a growth of 4 percent, helped largely by a predicted recovery in commodity prices.

3- The US economy, the world largest, is projected to grow 1.5 percent in 2010, following a sharp 2.7 percent decline in 2009.

4- In Europe, a smaller rebound is expected. The IMF dropped its dire prediction of a 0.3 percent contraction for the 16 States Eurozone in 2010, and now projects a 0.3 percent growth instead.

However, IMF’s Dominique Strauss-Kahn (see photo) warns that there are still plenty of problems ahead for the world economy. Today, in a speech in Istanbul, Strauss-Kahn said that the crisis is not over. According to him, unemployment will continue to rise, and the financial sector still face serious risks. Overall, the global economy will shrink by 1.1 percent this year, but it will rebound to a growth of 3.1 percent in 2010.

However, despite the projections of the IMF, and  while the economic outlook for the rich and emerging economies that make up the G 20 is improving, the poor countries in much of Africa, Asia and Latin America show little or no sign of recovery. The governments of the G20 have spent trillions of dollars to bail out banks, insurance companies and car companies, but have not delivered on their promise of 50 billion for the poorest countries made 6 months ago.

For the full IMF report on the world economic outlook click here.