Washington: The International Monetary Fund (IMF) on Tuesday sharply raised its growth forecasts for the world economy in 2010 saying the recovery from the global financial crisis had been stronger than expected.
In its latest update of the World Economic Outlook, the IMF said the world economy will expand by 3.9% in 2010, much higher than its October projection of 3.1%. It said next year economic activity would edge up further to 4.3%.
“The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions,” the IMF said.
It said the rebound in most advanced economies would likely remain weak, with high unemployment rates and rising public debt posing challenges to policymakers. In comparison, the recovery in emerging and developing countries should be much more vigorous, driven by strong domestic demand.
The IMF said many central banks can afford to maintain low interest rates this year as underlying inflation is expected to remain low and unemployment high for some time.
It said there were rising concerns in some emerging market economies about the surge in capital inflows and the implications for asset prices and exchange rate pressures.
The Fund said because of the fragile nature of the recovery, fiscal policies should remain supportive and stimulus measures planned for 2010 should be fully implemented.