Risks Not Sufficient to Upset Recovery – IMF
In its World Economic Outlook on Monday, April 11, 2011, the International Monetary Fund (IMF) reported that risks are not expected to be severe enough to deter world economic recovery this year.
In a new forecast, the IMF predicted the global economy to grow by 4.4 percent this year, a combination of the expected 2.4 percent growth from advanced economies and the 6.5 percent growth from emerging and developing economies.
The world’s second largest economy, China, topped the growth chart at 9.6 percent.
The first and third largest economies, US and Japan, on the other hand, laid low with expected growth rates of 2.8 percent and 1.4 percent, respectively.
In addition, UK is expected to grow to 1.7 percent, Germany to 2.5 percent and the Eurozone countries to 1.6 percent.
The IMF remarked that though the global economy is on a firm path to recovery, threats to its growth still remain.
Oil prices are considered to be the major risk as a result of the geopolitical uncertainty in the Middle East. A Washington-based institution forecasted the average oil price for this year to be $107 a barrel after $79 a barrel in 2010.
Aside from oil prices, other threats are increasing food prices due to weather-related supply shocks brought by the drought and wildfires in Russia and Ukraine, the possibility of boom-bust dynamics from the inflation building in Asia’s fast-growing economies, the 205M worldwide unemployment at present and Europe’s debt woes.
The IMF’s growth forecast was prepared for the spring meeting of the agency and its sister lending company, the World Bank.
In the meeting, the finance officials will evaluate how big the threat in the rise in energy and food prices will be and what they can do collectively in response to the political turmoil in the Middle East and North Africa.