RTTNews - The International Monetary Fund or IMF may raise its 2010 growth outlook for the world economy in the coming weeks, reflecting some improvements in global economic conditions, IMF's First Deputy Managing Director John Lipsky said Friday. He called for forceful policies to tackle the financial sector stress and continued international collaboration to ensure signs of economic improvement lead to a sustained global recovery.
In a keynote address to Turkish Industrialists' and Businessmen's Association in Bodrum, Lipsky said, Financial conditions have improved, confidence is recovering gradually, and indicators of future production and demand have firmed. Reflecting these developments, I expect that in the coming weeks we will revise our growth projections modestly upward, mainly with regard to 2010.
However, he warned that given the worldwide increase in unemployment, it is far too early to conclude that the goal of restoring global growth has been accomplished.
While noting that recent indicators have signaled a slowdown in economic contraction, Lipsky said the timing and pace of the global economic recovery remains uncertain.
In April, the IMF had forecast that the global economy will contract by 1.3% in 2009, the deepest recession since the World War II. The economy is then expected to grow by 1.9% in 2010. The IMF is due to announce its updated forecasts for the world economy on July 7.
However, Lipsky said, Even the upbeat indicators widely cited as representing green shoots still point to a global recovery that would be sluggish by historic standards.
He said activity in the advanced economies will revive only gradually over the course of 2010, weighed down by financial deleveraging, limited credit growth, weak household income growth and declining household net worth. Emerging economies are unlikely to return to trend growth while advanced economies are still underperforming. As a result, output gaps and unemployment rates in most economies likely will continue rising through 2010, Lipsky said.
In this context, he said, it should be clear that in most cases, continued strong policy actions will be needed during the remainder of this year and into 2010 in order to insure that economic activity begins a sustained improvement.
He stressed that robust growth will not be achieved until continuing financial sector problems are addressed forcefully. He noted that recent bank stress tests in major advanced economies, especially in the United States and the United Kingdom, have represented a significant step toward rebuilding market confidence and attracting new private capital.
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