IMF Predicts Stronger 2010 Global Rebound After 09 Contraction

IMF predicts the global economic rebound next year will be stronger than it forecast in April as the financial system stabilizes and the pace of contractions from the U.S. to Japan moderates. IMF said in a revised forecast that the world economy will expand 2.5 percent in 2010, compared with its April projection of 1.9 percent growth. A contraction this year will be 1.4 percent, worse than an April forecast for a 1.3 percent drop..

The improved outlook for next year reflects differing stages of recovery across the globe, with emerging economies including China helping drive the world out of the worst recession in six decades, while Europe lags behind the U.S. and Japan. Still, the fund warned that the pickup is expected to be “sluggish” and called repairing the international banking system a priority.

Advanced economies will continue to lead the slump this year by shrinking 3.8 percent. They will grow 0.6 percent in 2010, more than forecast in April, when the fund expected no growth for next year.

As per IMF the U.S. GDP will shrink 2.6 percent this year before expanding 0.8 percent in 2010 while for Japan likely to expand by 1.7 percent next year however this year its like to contract 6 percent.

Emerging and developing economies will grow 4.7 percent next year, a 0.7 percentage point increase from the previous forecasts. This year they will expand 1.5 percent, compared with a 1.6 percent expansion expected in April.

China’s growth is forecast to accelerate to 8.5 percent next year, a percentage point more than expected in April, after slowing to 7.5 percent this year. India’s economy will expand by 6.5 percent in 2010, compared with the April forecast of 5.6 percent, after a 5.4 increase percent this year that was higher than the IMF’s prior estimate.

Bloomberg