Global Recovery Under Way but Likely to Be Slow, Says IMF
| Author | International Monetary Fund |
The recovery is expected to be slow, as financial systems remain impaired and support from public policies will gradually have to be withdrawn. Households in economies that suffered asset price busts will continue to rebuild savings while struggling with high unemployment, according to the October World Economic Outlook (WEO), released on October 1.
"The recovery has started. Financial markets are healing," said IMF Chief Economist Olivier Blanchard. "In most countries, growth will be positive for the rest of the year, as well as in 2010," But he stressed that, to sustain the recovery, private consumption and investment will have to strengthen as high public spending and large fiscal deficits are unwound.
"The current numbers should not fool governments into thinking that the crisis is over," he warned at a press conference. He urged countries around the world to coordinate policies to achieve a global rebalancing and sustain the recovery.
The report was released ahead of the IMF-World Bank Annual Meetings being held in Istanbul, Turkey.
Key WEO projections include:
* World growth. After contracting by about 1 percent in 2009, global activity is forecast to expand by about 3 percent in 2010 (see table).
* Advanced economies are projected to expand sluggishly through much of 2010. Average annual growth in 2010 will be only modestly positive at about 1¼, following a contraction of 3½ percent during 2009.
* Emerging and developing economies. Real GDP growth is forecast to reach 5 percent in 2010, up from 1 ¾ percent in 2009. The rebound is driven by China, India, and a number of other emerging Asian countries. Economies in Africa and the Middle East are also expected to post solid growth of close to 4 percent, helped by recovering commodity prices.
[ CHART ARE NOT INCLUDED ]
The pace of recovery is slow, and activity remains far below precrisis levels. The pickup is being led by a rebound in manufacturing and a turn in the inventory cycle, and there are some signs of gradually stabilizing retail sales, returning consumer confidence, and firmer housing markets. As prospects have improved, commodity prices have staged a comeback from lows reached earlier this year, and world trade is beginning to pick up.
The triggers for this rebound are strong public policies across advanced and many emerging economies that have...
To continue reading
Request your trial