IMF Says Global Economy Still Fragile

The IMF is predicting a bumpy road ahead for the global recovery.

January 25, 2011- The global economic recovery has gained some momentum, but could spiral down if advanced countries don’t manage their debt load, and surging economies don’t keep a lid on too much growth, too quickly, the IMF cautions.

The International Monetary Fund believes that the global economy will grow by 4.4 per cent in 2011, a small rise from the 4.2 per cent it predicted last October. The difference is due to a more forceful recovery in the last part of 2010 and the repercussions of U.S. financial decisions to boost their economy. The IMF’s forecast of an increase to 4.5 per cent for 2012 will stay the same.

The IMF warned that the road for world economic growth will be bumpy, however.

Wealthier countries like the U.S. and Canada, will crawl along by 2.5 per cent for the next two years, not enough of an increase to change the jobless situation.

The globe’s developing countries like China and India will jump by 6.5 per cent in 2011 and 2012, emphasizing the fact they must balance sustainable growth alongside helping with the world economic recovery.

“The two-speed recovery continues,” the IMF stated Tuesday. “In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks. In many emerging economies, activity remains buoyant, inflation pressures are emerging, and there are now some signs of overheating.”