Washington - The world is beginning to pull out of its first
recession since World War II, the International Monetary Fund said in
a slightly rosier economic report released Wednesday.
In its first update since April, the IMF said the global economy
was already stabilizing, the financial crisis has eased and the
recession will end in the second half of this year.
The report marked the first time the IMF has sounded a more
positive note since the financial crisis struck in October, though
the global lender also warned against complacency.
'The worst is behind us and the recovery is coming,' said IMF
chief economist Olivier Blanchard. 'The recovery is fragile however.'
The world economy will shrink 1.4 per cent this year but grow by
2.5 per cent in 2010, the IMF said. That compares to April's
prediction of a 1.3-per-cent contraction in 2009 and growth of 1.9
per cent next year.
Blanchard said the improved forecast was mainly due to
improvements in Asia, especially China and India. But the IMF warned
the recovery would be 'uneven' and growth would remain 'sluggish' for
much of the next 2 years.
Most of the growth over the next 2 years will come from the
developing world. Wealthy countries where the crisis began will
likely stay in recession until early to mid-2010.
Advanced economies will shrink 3.8 per cent this year and grow
only 0.6 per cent in 2010, the IMF said. Developing countries by
contrast will grow 1.5 per cent in 2009 and 4.7 per cent next year.
Blanchard said governments would have to continue spending money
to boost demand, but should also begin tackling long-term budget
deficits that are getting out of hand in many wealthy countries.
Without the right policies, there is a 'great risk that the
recovery actually falters,' Blanchard warned.
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