IMF optimistic over global growth
Source: Agencies |
April 18, 2012, Wednesday
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Print Edition
Print Edition
THE International Monetary Fund is more optimistic about the global economy after seeing faster US growth and a coordinated effort in Europe to address its debt crisis.
The global lending organization yesterday said the US economy should expand 2.1 percent this year. Europe will likely shrink 0.3 percent, and the world economy should grow 3.5 percent. All three of the IMF's estimates are slightly better than its January's forecasts.
The IMF praised European leaders for bulking up its bailout fund and taking other steps to address the crisis. It said the crisis still looms as the biggest threat to the global economy.
The IMF's World Economic report comes as the 187-nation IMF and its sister lending institution, the World Bank, prepare to hold their spring meetings in Washington this week.
The report represents improvement from January, when IMF officials warned that the global economic recovery was in danger of stalling.
Since then, European leaders have worked together on a plan intended to restrain deficit spending. New governments in Spain and Italy have committed to reforms and spending cuts. And the European Central Bank has lent more than US$1 trillion to the region's banks. That has cut borrowing costs in some of the most troubled countries.
In the US, consumers are spending more, business investment has grown and the job market has shown "signs of life," the report said.
"With the passing of the euro crisis, and some good news about the US economy, some optimism has returned," wrote Olivier Blanchard, the IMF's chief economist. "It should remain tempered."
Blanchard said the risk that Europe's debt crisis could worsen remains high. Even if it does not, growth in most advanced economies may stay slow.
Governments are cutting spending and raising taxes in Europe, the US and Japan, dragging on growth, the report said. And banks are also cutting their debts, particularly in Europe. That's reducing lending and also slowing growth.
IMF Managing Director Christine Lagarde said last week that the better outlook means the IMF might not need to seek as big a boost to its war chest.
The global lending organization yesterday said the US economy should expand 2.1 percent this year. Europe will likely shrink 0.3 percent, and the world economy should grow 3.5 percent. All three of the IMF's estimates are slightly better than its January's forecasts.
The IMF praised European leaders for bulking up its bailout fund and taking other steps to address the crisis. It said the crisis still looms as the biggest threat to the global economy.
The IMF's World Economic report comes as the 187-nation IMF and its sister lending institution, the World Bank, prepare to hold their spring meetings in Washington this week.
The report represents improvement from January, when IMF officials warned that the global economic recovery was in danger of stalling.
Since then, European leaders have worked together on a plan intended to restrain deficit spending. New governments in Spain and Italy have committed to reforms and spending cuts. And the European Central Bank has lent more than US$1 trillion to the region's banks. That has cut borrowing costs in some of the most troubled countries.
In the US, consumers are spending more, business investment has grown and the job market has shown "signs of life," the report said.
"With the passing of the euro crisis, and some good news about the US economy, some optimism has returned," wrote Olivier Blanchard, the IMF's chief economist. "It should remain tempered."
Blanchard said the risk that Europe's debt crisis could worsen remains high. Even if it does not, growth in most advanced economies may stay slow.
Governments are cutting spending and raising taxes in Europe, the US and Japan, dragging on growth, the report said. And banks are also cutting their debts, particularly in Europe. That's reducing lending and also slowing growth.
IMF Managing Director Christine Lagarde said last week that the better outlook means the IMF might not need to seek as big a boost to its war chest.
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