2 Oct 2009

Global economic recovery underway, says IMF

7:01 pm on 2 October 2009

The International Monetary Fund (IMF) says a global economic recovery has begun, led by Asia, but unemployment will continue to rise for some time.

In its World Economic Outlook, the fund has cut its forecast for the amount banks are likely to lose in bad loans and investments as a result of the improved outlook.

The IMF now expects world output to contract by 1.1% in 2009 before growing by 3.1% in 2010. This is more upbeat than its last outlook in July.

The fund's report the pace of recovery is expected to be slow. World economic growth is expected to average a little more than 4% per year after 2010.

Emerging and developing countries are clearly front runners in the recovery, expanding by 1.5% this year before rebounding 5% next year led by China and India, the IMF said, also noting signs of stabilization in Latin America.

The IMF revised up China's growth forecast for next year to 9%.

In Japan the economy is expected to recover by 1.7% next year, buoyed by fiscal and monetary stimulus measures.

Meanwhile, a Turkish student, who is also the editor of a small left-wing newspaper Birgun, threw a shoe which landed at IMF Managing Director Dominique Strauss-Kahn's feet on Thursday as he made a speech to students in Istanbul.

The incident echoed that of an Iraqi journalist who last December hurled his shoes, a grave insult in the Muslim world, at then US President George W. Bush.