Developed world growth tepid; EMs shining: IMF

The International Monetary Fund (IMF) said that economic recovery in the advanced nations is losing steam even as the emerging economies continue to race ahead. IMF chief economist said that some emerging nations need more market-oriented currency policies, while wealthy nations need to cut budget deficits. IMF officials said that the world economy will expand 4.8% this year and slow down slightly next year. Emerging economies will expand more than 7% this year, while developed nations can expect to grow just 2.7%. Industrialised nations are projected to grow by 2.2% in 2011, the IMF said. Although the global recovery is uneven and fragile, IMF chief economist Olivier Blanchard said that the world is not likely to slip back into a recession. Still, he urged policy-makers around the globe to take tough actions.



China is expected to grow at a faster rate; 10.5% in 2010 and 9.6% in 2011, the IMF said in its latest World Economic Outlook report. The advanced economies by contrast are projected to grow slowly. GDP growth in the US, for instance, is projected to be 2.6% in 2010 and 2.3% in 2011. The Advanced European countries - the UK, Germany, France, Italy, Spain and some others - are projected to grow at 1.7% in 2010 and 1.6 in 2011.

Latin America has recovered strongly, with real GDP growth at about 7%. The recovery in Latin America is being led by Brazil, where real GDP growth has been close to 10% since the third quarter of 2009 and the economy is now showing signs of overheating, the IMF said. Global trade is forecast to expand by 4.8% in 2010 and by 4.2% in 2011, the IMF said, adding that there would a temporary slowdown during the second half of 2010 and the first half of 2011.

The IMF also revised its estimate for the total of bank write-downs and loan provisions related to the financial crisis. It said these would amount to US$2.2 trillion between 2007 and 2010, down from US$2.3 trillion in April. The fund put the value of write-downs still to be realised at roughly US$550bn.