FRANKFURT — According to an article in today’s New York Times, the International Monetary Fund on Thursday forecast that the world economy would expand 3.1 percent next year, after a year in which much of the world struggled through a recession.
In its World Economic Outlook, the fund’s prognosis was marginally better than its prediction in July that growth in 2010 would reach 2.5 percent. But it emphasized that the upswing was mainly a result of aggressive crisis management in the United States, Europe and Asia, not a self-sustaining recovery. “Premature exit from accommodative monetary and fiscal policies seems a significant risk, because the policy-induced rebound might be mistaken for the beginning of a strong recovery in private demand,” the fund wrote. It added that the “fragile global economy” was still vulnerable to other potential shocks, including a run-up in oil prices, a widespread outbreak of swine flu, global political events and protectionism.
The forecast masked significant differences among regions, the monetary fund said. It predicted China’s economy would register 9 percent growth next year. But the United States can expect an expansion of 1.5 percent, and the 16-nation euro zone a 0.3 percent growth rate, weak performances for advanced industrial economies. The I.M.F. had previously forcasted the American economy would contract 2.7 percent for all of 2009, and the euro zone’s would shrink 4.2 percent. The forecasts come as the monetary fund acknowledged that the world was emerging from a difficult recession, helped by stimulus policies in the United States, Europe and China.
“The global economy appears to be expanding again, pulled up by the strong performance of Asian economies and stabilization or modest recovery everywhere,” the fund wrote.
The monetary fund emphasized what private sector economists have observed about the upswing, that it is driven mainly by a rebuilding of depleted inventories. But the fund also said there were “some signs of gradually stabilizing retail sales, returning consumer confidence and firmer housing markets.”
But it also observed that rising joblessness remained a threat. “Unemployment rates are expected to remain at high levels over the medium term in a number of advanced economies,” it stated.
Source: NYT 1 Oct 2009, by CARTER DOUGHERTY
