Headquarters building of the International Monetary Fund, Washington, D.C.
Predicting the future of the global economy has become an increasingly thankless task in the last 12-18 months. And we have become used to every day bringing a different opinion from a different body of experts.
The International Monetary Fund (IMF), counting as it does amongst its members all but eight of the member states of the United Nations, is almost certainly the most influential body in existence when it comes to oversight of the global economy. Therefore when it speaks the world tends to sit up and listen. And speak it did today, with its revised forecast for global economic growth, or decline, during 2009 and 2010.
When the IMF released its last forecast in April it was predicting a 1.3% contraction for the world economy in 2009. Now it has revised that forecast to a 1.4% contraction. Something we did not want to hear. However there is better news for 2010.
After anticipating a 1.9% increase in global economic growth for next year, when they issued their last report in April, they have now upped that figure to 2.5%. A not inconsequential increase when you consider the meltdown that has occurred since the middle part of last year and which has left few countries untouched.
The driving forces for next year's growth are not unsurprisingly China and India who, with growth rates of 7.5% and 5.4% for 2009, have merely seen their economies expanding at a lesser rate than might have previously been expected, rather than showing an actual decline. Next year their respective growth rates are forecast to be 8.5% and 6.5%.
Of the other major economies in the world, the USA should see this year's contraction of 2.6% turn in to growth of 0.8% in 2010. In Japan, the quite horrendous contraction of 6.0% in 2009 is expected to right itself, with resulting growth of 1.7% next year. Likewise the UK, where modest growth of 0.2% in 2010 will be a welcome reversal of the expected decline of 4.2% during the current year.
One area of concern may be the Euro zone, where a negative figure of 0.3% is predicted for 2010. But coming on the back of a 4.8% contraction for 2009 the much smaller decline expected for next year may still come as something of a relief.
When issuing their forecasts the IMF were careful to emphasize that matters were still far from clear and any recovery would be slow in the making, as the BBC duly reported:
Explaining the reasoning behind their increased optimism, they added:
Whatever the conclusions drawn by the markets after they had analyzed the IMF report, tomorrow is bound to bring yet more predictions from yet more economists. And the conclusions drawn today will become a distant memory.
When the IMF released its last forecast in April it was predicting a 1.3% contraction for the world economy in 2009. Now it has revised that forecast to a 1.4% contraction. Something we did not want to hear. However there is better news for 2010.
After anticipating a 1.9% increase in global economic growth for next year, when they issued their last report in April, they have now upped that figure to 2.5%. A not inconsequential increase when you consider the meltdown that has occurred since the middle part of last year and which has left few countries untouched.
The driving forces for next year's growth are not unsurprisingly China and India who, with growth rates of 7.5% and 5.4% for 2009, have merely seen their economies expanding at a lesser rate than might have previously been expected, rather than showing an actual decline. Next year their respective growth rates are forecast to be 8.5% and 6.5%.
Of the other major economies in the world, the USA should see this year's contraction of 2.6% turn in to growth of 0.8% in 2010. In Japan, the quite horrendous contraction of 6.0% in 2009 is expected to right itself, with resulting growth of 1.7% next year. Likewise the UK, where modest growth of 0.2% in 2010 will be a welcome reversal of the expected decline of 4.2% during the current year.
One area of concern may be the Euro zone, where a negative figure of 0.3% is predicted for 2010. But coming on the back of a 4.8% contraction for 2009 the much smaller decline expected for next year may still come as something of a relief.
When issuing their forecasts the IMF were careful to emphasize that matters were still far from clear and any recovery would be slow in the making, as the BBC duly reported:
The global economy is beginning to pull out of a recession unprecedented in the post-World War II era, but stabilisation is uneven and the recovery is expected to be sluggish
Explaining the reasoning behind their increased optimism, they added:
Financial conditions have improved more than expected, owing manly to public intervention, and recent data suggests that the rate of decline in economic activity is moderating, although to varying degrees among regions
Whatever the conclusions drawn by the markets after they had analyzed the IMF report, tomorrow is bound to bring yet more predictions from yet more economists. And the conclusions drawn today will become a distant memory.
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