July 9th, 2009 @ kadraoui
WASHINGTON: The global economy is slowly starting to pull out of its deepest recession since the Second World War but recovery will be sluggish and policies need to remain supportive, the International Monetary Fund (IMF) said yesterday. In an update of its World Economic Outlook, the IMF said the global economy is likely to contract 1.4 per cent this year, a touch steeper than the 1.3pc decline it projected in April. However, it now sees world economic growth picking up to 2.5pc next year, compared to an April projection of 1.9pc. IMF chief economist Olivier Blanchard said forces dragging down the economy were easing in intensity but those pushing it up were still weak, despite heavy government spending and central bank lending. “This leads us to predict that while the world economy is still in recession, the recovery is coming but it is likely to be a weak recovery,” he said. The IMF said financial conditions had improved more than expected as governments have pumped huge amounts of money into their economies, and warned that withdrawing supportive fiscal and monetary policies prematurely would hurt the recovery. It said while the world’s advanced economies are expected to recover modestly next year, growth will remain below potential, suggesting unemployment will continue to rise. It said the US economy will contract 2.6pc this year, slightly less than it thought in April, with growth resuming next year, albeit at a mere 0.8pc. The IMF said the euro-area economy would likely shrink 4.8pc this year, 0.6 percentage point more than it had forecast in April. Next year, the IMF said the euro-area would contract 0.3pc.
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