Thursday, October 1, 2009

World Coming Back On Its Feet: IMF

. Thursday, October 1, 2009

By stockOzone team

The International Monetary Fund (IMF) said on Thursday that the global economy is bouncing back from the slowdown blues and will

clock a growth of 3.1% in 2010. The rebound will be lead by emerging economies, especially India and China, that will grow at 9% and 6.4% respectively, it said. In July this year, IMF’s growth projection for 2010 was lower at 2.5%.

“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,” he added. But the ‘World Economic Outlook’ released by the fund added a note of caution and said that the recovery is expected to be slow and hence reversal of expansionary monetary measures has to be slow. It emphasised that the upswing was mainly a result of aggressive crisis management in the United States, Europe and Asia, and is 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.

According to the report there were “some signs of gradually stabilising retail sales, returning consumer confidence and firmer housing markets.

Sustaining healthy growth over the medium run will depend critically on addressing the supply disruptions generated by the crisis and rebalancing of the global pattern of demand. To accommodate demand-side shifts, there will need to be changes on the supply side.

This will require actions on many fronts, including measures to repair financial systems, improve corporate governance and financial intermediation, support public investment, and reform social safety nets to lower precautionary saving.

Disclosure: Author does not own any of the stocks discussed here.

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