BASSETERRE, St. Kitts –A global economic rebound is being actualised much faster than initially projected and this year the world is expected to witness a 3.9% growth – a significant bounce-back from negative growth projections given last year.
This is according to the latest economic forecast by the International Monetary Fund (IMF). The World Economic Outlook, issued on January 26, explains that while the financial institution expected growth in the global economy to stumble into negative territory throughout 2009, a 3.9% growth is now expected in 2010 and should increase to 4.3% in 2011.
Growth rates vary across countries, but the World Economic Outlook stated that emerging markets such as Asia are seeing “relatively vigorous” growth. Progress made by advanced economies was described as “sluggish”, however, as they are “still dependent on government stimulus measures”.
In a recent video interview, IMF Chief Economist Olivier Blanchard said, “For the moment, the recovery is very much based on policy decisions and policy actions. The question is when does private demand come and take over. Right now it’s ok, but a year down the line, it will be a big question.”
Since October, IMF Managing Director Dominique Strauss-Kahn warned that countries risk a return to recession if post-crisis stimulus measures are withdrawn too soon. At that time, the IMF report ‘Crisis averted – What next?’ indicated that as global growth increases, Latin America and the Caribbean must implement policies that would better prioritize public expenditures, provide conditions for domestic growth and reduce poverty.
Another concern noted was the need to advance the reform agenda and further its preparation for future shocks.
With promising growth, however, there remains a need to continue repairing the financial sector in advanced and the hardest-hit emerging economies.
The IMF report concludes, “Policymakers will also need to move boldly to reform the financial sector with the objectives of reducing the risks of future instability and rethinking how the potential fallout of financial crises would be borne in the future.”
