International Monetary Fund Raises Growth Forecast

The International Monetary Fund says the world economy is pulling out of recession faster than previously thought.

The latest World Economic Outlook says the global economy will grow by 3.1 percent in 2010, after contracting about 1 percent in 2009.

That is better than the last update in July - when the report predicted growth of 2.5 percent. The IMF credits efforts such as interest rate cuts and other stimulus programs.

But the IMF's chief economist says the improving numbers do not mean the economic crisis is over. Olivier Blanchard says nations around the world should coordinate policies to keep the recovery on track.

The study says growth in China, India and other Asian countries is driving economic recovery in the developing world. In those nations, growth is expected to reach five percent next year.


The report came out Thursday ahead of the IMF and World Bank annual meetings being held in Istanbul, Turkey.

While the IMF report says Asian economies are leading the recovery, it also says there is reason for concern.

The IMF says exports from Asia are still down about 30 percent from their peak in 2008 and that exports will continue to be weak because of slow recoveries in the United States and Europe.

Still, the IMF projects China's economy to grow by nine percent in 2010, followed by India at 6.4 percent. The ASEAN-5 - Indonesia, Malaysia, Philippines, Thailand and Vietnam - will grow four percent.

In contrast, Japan - the world's second largest economy - is only projected to grow 1.7 percent. South Korea, Hong Kong and Singapore are expected to grow between 3.4 and 4.1 percent.

The report says the U.S. economy is improving more quickly than anticipated, but raised concerns about the impact of high unemployment and consumer debt. It says the U.S. is likely to grow at under a two percent rate for "a considerable time."

The IMF is forecasting sluggish growth for many European economies, warning that many emerging European economies especially those that depend on foreign investment will continue to struggle. However, Russia, which has also seen a sharp decline in foreign investments, is expected to grow 1.5 percent in 2010.

Latin American countries are forecast to grow almost three percent in 2010 due to improvements in commodity prices. But officials warn countries in the region need to strengthen their fiscal policies and do more to encourage investment.

Stabilizing oil prices are helping the Middle East, which is expected to grow more than four percent in 2010.

African nations are also pulling out of recession, due in part to rising commodity prices, but the IMF says the region's outlook "is subject to significant uncertainty."

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