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June 16, 2011

IMF: World Economic Outlook 'Not Reassuring'

The International Monetary Fund says recent trends in the world's major economies are "not reassuring," and it warns there is a growing chance the global economy could stumble.  

The IMF's World Economic Outlook, released Friday, says the global economy expanded at a rate of 4.3 percent for the first three months of the year.  But it points to recent weakness in the United States and other advanced economies, whose growth is forecast to be "sluggish" - only about 2.5 percent - through next year.

The IMF says global inflation picked up from 3.5 percent in the last three monthsd of 2010 to 4 percent in the first quarter of this year - an increase twice as high as was predicted in the most recent Woprld Economic Outlook, in April.  

The new report says renewed concerns about financial stability in Greece and other European countries could spread, and that many countries may still suffer economic after-effects of the earthquake and tsunami in Japan.  

Fast-growing emerging economies that need more raw materials may have problems, the IMF says, as rising demand pushes up prices for food and fuel.

The IMF report urges advanced economies to find ways to cut spending without slashing programs that stimulate economic growth.  

It also says Europe needs to do more to repair a banking system that played a key role in the global recession.