09 July 2009 05:49 [Source: ICIS news]
SINGAPORE (ICIS news)--The International Monetary Fund (IMF) expects the global economic recovery to be gradual, allowing for a soft rebound next year, the global financial and economic stability watchdog said in a report released on Thursday.
In its World Economic Outlook (WEO) update, the IMF nudged up its growth forecast for the global economy to 2.5% from 1.9% previously, taking into account the positive effects of fiscal and monetary measures implemented across the globe.
Growth will come after a forecast 1.4% GDP contraction, the worst recession to hit the world since World War II.
“The good news is that the forces pulling the economy down are decreasing in intensity,” IMF chief economist Olivier Blanchard.
“The bad news is that the forces pulling the economy up are still weak. The balance is slowly shifting, and 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,” Blanchard said.
In the WEO report, the IMF projects world trade to grow a minimal 1.0% next year after a forecast 12.2% decline this year.
The governments’ responses to the economic and financial crises around the world were deemed instrumental in preventing further deterioration in economic fundamentals, which prompted the revision of IMF's growth forecasts.
“The unprecedented policy response in both the financial and macroeconomic domains has reduced the risk of systemic collapse and begun to restore market confidence,” said Jose Vinals, director of the IMF’s monetary and capital markets department.
The multilateral institution adjusted up its growth projections for
In addition, the ASEAN-5 (Association of Southeast Asian Nations) composed of Malaysia, Singapore, Thailand, Indonesia and Vietnam (based on the IMF document) should be able to rebound with a 3.7% growth next year following a forecast 0.3% fall in economic output in 2009.
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