News / Economy

IMF Raises 2010 Growth Forecast, Developing Economies Lead the Way

William Ide

The International Monetary Fund says the global economy will grow at a faster-than-expected rate this year as it continues to rebound from a crippling financial crisis.  The Washington-based international lending agency says the emerging markets of Brazil, China and India will help lead the global rebound.  

In its latest World Economic Outlook report, the International Monetary Fund forecasts global economic growth of 4.2 percent for this year.  Its forecast for growth in 2011 remained at 4.3 percent, unchanged from its last forecast in January.

IMF chief economist Olivier Blanchard says the world economy is at an important stage of its efforts to rebound from the global financial crisis.

"A global depression has been averted," said Olivier Blanchard. "The world economy is recovering, and recovering better than we had previously thought likely.  This is certainly welcome news."

Blanchard notes that emerging economies are leading the way in helping boost world economic growth.  Asia is forecast to see the strongest growth this year at 8.7 percent.

The International Monetary Fund says many economies have resumed a high rate of growth, but challenges remain.  Among advanced economies, the United States is expected to outperform Europe and Japan, but it will lag behind China and other developing nations.

IMF chief economist Blanchard:

"In the U.S., consumers, who were the drivers of the economy before the crisis are being more prudent," he said. "In Europe, where banks play a central role in financial intermediation, the weak banking sector limits credit supply.  In Japan, deflation has re-appeared, leading to higher interest rates and putting in danger an already weak recovery."

China is expected to grow by 10 percent this year, and India by 8.8 percent.  The U.S. economy is forecast to grow by 3.1 percent.

The International Monetary Fund says growth for the 16 European countries that share the euro currency will be one percent in 2010.

Blanchard says despite the good news, achieving strong sustained and balanced growth for the global economy will not be easy.

"It will require more work, namely fiscal consolidation in advanced countries, exchange rate adjustments, rebalancing of demand across the world, these are the tasks facing policymakers over the next few years," said Blanchard.

Fiscal consolidation refers to the use of policy to reduce government deficits and debt.

The IMF report warned the failure of nations to contain soaring public debt could have severe consequences on the global economy.

Blanchard says the solution to the challenges facing emerging and advanced economies lies in the adjustment of their exchange rates.  He says that as advanced economies work to deal with debt and deficit, which would have a negative impact on growth, they may need to let their currencies depreciate to help increase exports and hence growth.

He says emerging countries need to do the opposite, let their currencies appreciate and reduce exports.  Blanchard says that it is in their interest to do so because global growth will help support the growth of their economies.

"In China, for example, a shift away from exports, towards domestic consumption, a shift that requires both structural measures to decrease savings, and an appreciation of the currency, appears highly desirable," he said.

China has been under increasing pressure from the United States and other countries to let its currency, the yuan, strengthen so global products can be more competitive against Chinese exports.

The new IMF forecast for global economic growth was issued just before a key meeting of global financial leaders this week in Washington.

On Friday, global financial leaders will hold day-long talks with the Group of 20 nations, a bloc that includes the world's richest industrial nations as well developing nations such as Brazil, China, India and Russia.

The talks on Friday, as well as meetings on Saturday and Sunday, are expected to focus on efforts to overhaul financial regulatory systems, rebalance global growth and ways to make the recovery more sustainable.   

You May Like

Video On the Scene: In Gaza, Darkness Brings Dread and Death

Palestinians fear nighttime raids, many feel abandoned by outside world, VOA's Scott Bobb reports More

African Small Farmers Could Be Key to Ending Food Insecurity

Experts say providing access to microloans, crop insurance, better storage facilities, irrigation, road systems and market information could enable greater production More

University of Michigan Wins Solar Car Race

Squad guided its student-designed solar-powered vehicle to fifth consecutive time victory in eight-day bi-annual American Solar Challenge More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Vietnamese Staging Chinese Product Boycott After Oil Rig Spati
X
Reasey Poch
July 28, 2014 7:18 PM
China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video Vietnamese Staging Chinese Product Boycott After Oil Rig Spat

China recently pulled an oil rig from an area of the disputed South China Sea that Vietnam also claims. Despite the action, the incident has had a lingering effect on consumers in Vietnam. VOA's Reasey Poch reports from Hanoi on an effort to boycott Chinese products.
Video

Video ESA Spacecraft to Land on a Comet

After a long flight through deep space, a European Space Agency probe is finally approaching its target -- a comet millions of kilometers away from earth. Scientists say the mission may lead to some startling discoveries about the origins of the water on earth. VOA’s George Putic has more.
Video

Video Young Africans Arrive in US for Leadership Program

President Barack Obama's Young African Leadership Initiative has brought hundreds of young Africans to the United States for a six-week program aimed at building their knowledge and skills in fields such as public administration and business. Out of the 50,000 young Africans who applied for the program, just one percent was accepted. VOA's Laurel Bowman caught up with some of those who made the cut and has this report.
Video

Video In Honduras, Amnesty Rumors Fuel US Migration Surges

False rumors in Central America are fueling the current surge of undocumented young people being apprehended at the U.S. border. The inaccurate claims suggest the U.S. will give amnesty to young migrants from the region. As VOA's Brian Padden reports from Honduras, these rumors trace back to President Obama's 2012 executive order to halt deportations for some young undocumented immigrants already living in the United States.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.