IMF ups global economic growth forecast to 2.5 per cent

The International Monetary Fund (IMF) has projected global economic growth during 2009-10 to be about 2.5 per cent in 2010, half a percentage point higher than its April forecast.

In an update of its World Economic Outlook, IMF said the global economy is beginning to pull out of the worst recession in the post-World War II era, but the pace of recovery is expected to be sluggish.

Among the major economies, growth rates have been marked up mainly for the United States and Japan, IMF said in its latest forecast.

"The good news is that the forces pulling the economy down are decreasing in intensity," IMF chief economist Olivier Blanchard said at an 8 July press briefing. "The bad news is that the forces pulling the economy up are still weak. The balance is slowly shifting, and this leads us to predict that, while the world economy is still in recession, the recovery is coming. But it is likely to be a weak recovery," he added.

The IMF also released a separate update to its Global Financial Stability Report (GFSR). Financial conditions have improved, as forceful policy intervention has reduced the risk of systemic collapse and expectations of economic recovery have risen. "The unprecedented policy response in both the financial and macroeconomic domains has reduced the risk of systemic collapse and begun to restore market confidence," José Vinãls, director of the IMF's Monetary and Capital Markets Department, told a briefing. But many vulnerabilities remain and complacency must be avoided, he added.