The International Monetary Fund Thursday released a revised economic forecast saying that world economic output will expand by 4.1 percent this year and by just under four percent in 2009. IMF economists say despite slowdowns in western economies, the world is doing surprising well. And the numbers indicate a global recession is unlikely. VOA's Barry Wood reports.
Recent economic news in the U.S. has been grim. A high profile bank failure panicked some customers. The government moved to bail out two mortgage giants. And inflation runs higher than at any time in the past decade.
Still, the IMF now forecasts growth to be higher than it had projected three months ago. Simon Johnson is the fund's outgoing chief economist.
"The effects of the financial disruption that started last summer [August 2007] are working their way through the US economy and other advanced industrial economies," said Simon Johnson. "But somewhat more slowly than we had anticipated. So, in terms of actual performance in the first quarter, there is good news."
Positive growth, although meager, is expected for the United States with a moderate pickup in 2009. Growth in developing countries is holding up well. In China, gross domestic product is expected to moderate to about 10 percent growth. That's down from 12 percent in 2007.
But Johnson says the Chinese currency is undervalued and China should allow it to rise more quickly.
Some see the year-long global credit squeeze, initiated by U.S. housing troubles, as nearing an end. One who does is Josef Ackermann, of Deutsche Bank. He warns the global economy is facing new challenges.
"We have the commodity price surge - including food prices and oil prices - and we have the weakening of the dollar," said Josef Ackermann.
Overall, economic forecasters say that despite unprecedented stress, global economic growth is holding up better than had been anticipated only three months ago.