8
Jul
IMF raises global economic growth forecast
The International Monetary Fund (IMF) has raised its forecast
for global economic growth this year, from 4% to 4.5%.
It said the world economy grew strongly in the first part of
this year, mainly due to robust growth in Asia.
Developed economies maintained a modest but steady recovery in
the same period.
But it warned risks had increased and there had been a setback
in progress towards financial stability.
Debt concerns
Concerns over the sustainability of government finances in the
developed world, especially Greece and others in Europe, were the
major threat to global recovery the agency argued.
It said governments should focus on improving their finances,
but warned them not to make cutbacks too rapidly.
In recent weeks, a number of governments have introduced
austerity measures to cut deficit levels.
The IMF said that European banks in particular were being
affected by the concerns about government debt and so were less
wiling to lend to each other. Less credit available to the wider
economy could undermine the recovery, it argued.
Although contagion to other regions of the world was likely to
be limited, there was a risk that Europe's troubles could have a
more substantial impact on global economic growth, it said.