Wednesday, October 06, 2010
The IMF's "fragile" 4.8% growth
Posted by David Smith at 07:00 PM
Category: Thoughts and responses

The International Monetary Fund, in its twice-yearly World Economic Outlook, attaches the word "fragile" to the global economy but nevertheless predicts strong 4.8% growth this year, followed by 4.2% in 2011. It predicts that world trade will grow by 11.4% this year, following its 11% fall last year, and will grow by 7% in 2011.

One of the big stories is the gap between the growth performance of advanced economies - 2.7% this year, 2.2% in 2011 - and emerging economies, 7.1% and 6.4% respectively.

This is the IMF's overall message:

"Thus far, economic recovery is proceeding broadly as expected, although downside risks remain elevated. Most advanced and a few emerging economies still face major adjustments, including the need to strengthen household balance sheets, stabilize and subsequently reduce high public debt, and repair and reform their financial sectors.

"In many of these economies, the financial sector is still vulnerable to shocks, and growth appears to be slowing as policy stimulus wanes. By contrast, in emerging and developing economies prudent policies, implemented partly in response to earlier crises, have contributed to a significantly improved medium-term growth outlook relative to the aftermath of previous global recessions."

The forecast is here. The IMF's growth forecasts for the UK, 1.7% this year, 2% in 2011, will inevitably attract some attention.