The International Monetary Fund has boosted its world economic growth estimate for next year, but says the global recovery will be weak.
In a new report, the IMF says it expects the world economy to shrink by 1.4 percent this year, but expand by 2.5 percent in 2010. The new growth projection is up from a 1.9 percent estimate issued in April. IMF Research Director Olivier Blanchard:
"The good news is that the forces down are decreasing in intensity, said Blanchard. "The bad news is that the forces pulling the economy up are still very weak.
Blanchard says an anemic recovery is on the way, one that initially will not generate enough jobs to reverse rising global unemployment rates. He says developing economies will experience a quicker and more pronounced recovery than advanced industrialized nations.
"Output in advanced countries is forecast to decline by 3.8 percent in 2009 before growing at a low 0.6 percent in 2010," he said. "By contrast, output in emerging market countries is forecast to grow at 1.5 percent in 2009 and 4.7 percent in 2010."
Blanchard said Asia, in particular, is poised for an economic rebound.
"After a tough first quarter [of this year], Asia is now set for a stronger performance than we had anticipated earlier," said Olivier Blanchard. "This is due in no small part to strong fiscal stimulus, notably in China and India, where we have revised our forecast up by nearly 1 percent for both 2009 and 2010."
The IMF research director stressed, however, that the global economic recovery is fragile and subject to risk. He said policymakers around the world must continue to strengthen battered financial systems. In industrialized nations like the United States, he said continued economic stimulus must be paired with reforms that will reduce government debt in the years to come.