New International Monetary Fund (IMF)’s report today showed the prospects for the global economy are slowly improving.
However, th IMF report underlined growth is expected to be weak, particularly in Europe.
The 2012 World Economic Outlook, published by the International Monetary Fund (IMF), added that unemployment in many advanced economies will stay high.
The report stresses that although action by policymakers in Europe has helped to reduce vulnerabilities, risks of a renewed comeback of the crisis in Europe continue to loom large, along with geopolitical uncertainties affecting the oil market.
The IMF report reveals that world output projected to grow 3.5 percent in 2012, recovering to 4.1 percent next year.
The report comes ahead of the Spring Meetings of the IMF and the World Bank in Washington D. C.
“For the past six months we’ve been on a rollercoaster ride.” -IMF’s Chief Economist Olivier Blanchard
Ms. Blanchard says the baseline is that growth is going to be slow in advanced economies; sustained, but not great, in emerging market and developing economies.
However, Mr. Blanchard noted that the the risk of things turning bad again in Europe is high.
IMF says real GDP growth should pick up gradually during 2012-13 seen in the first quarter of 2012, with signs of improvement in the United States, and the emerging economies remaining supportive. T
However, IMF projects a “mild contraction” in the euro area, although Germany and France might see positive growth.
Japan is projected to bounce back from 2011 destructive earthquake and tsunami with a recovery of 2 percent.
The report also called on governments to strengthen policies to solidify the weak recovery.
The report highlighted that advanced economies should implement medium-term budgetary savings, but not in a way that could undermine the recovery.
The report cites that in developing countries and emerging markets, policies should be geared toward ensuring a soft landing for economies that have seen sustained.
In addition, United States is projected at 2.1 per cent in 2012 and 2.5 per cent next year, reflecting ongoing fiscal consolidation and continued weakness in housing prices.
Meanwhile, growth in Canada will moderate slightly to close to 2 per cent.
Growth in Asia overall will average 6 per cent, with China slowing to 8.2 per cent and India to 6.9 per cent, IMF noted.
Meanwhile, in Europe, real GDP in the euro area is projected to contract in the first half of 2012 but then start recovering, except in Spain, Italy, Greece, and Portugal where recovery will only begin in 2013.
Growth in the UK will be weak in early 2012, the report said.
Overall growth for the Middle East and North Africa is forecast at 4.2 per cent this year, with oil producers buoyed by continued high oil prices.
Sub-Saharan Africa’s growth rate pick up to 5.4 per cent this year, with the region relatively less exposed to the global slowdown.
In November 2011, a United Nations report warned that the cooling global economy risks pushing the world into a double-dip jobs recession and triggering an outbreak of social strife unless governments take urgent action to stimulate employment growth.
In what it calls a “grim analysis” of the future of global employment, the International Labour Organization (ILO) noted that while private enterprises are in an even weaker position to retain employees since the start of the financial crisis, austerity measures implemented by governments have contributed to the growing numbers of unemployed.
According to World of Work Report 2011: Making markets work for jobs, 80 million jobs need to be created over the next two years for global employment to return to pre-crisis levels.
Reports say that one consequence of the crisis is that unemployment rose sharply to 205 million people in 2009 from 178 million in 2007. The loss of jobs means not only a loss of incomes but also an increase in vulnerability, especially in developing countries without comprehensive social protection, notes the report.
Estimates suggest that between 47 million and 84 million more people fell into, or were trapped in, extreme poverty because of the global crisis, which occurred immediately after food and fuel prices had risen sharply. As a result, the number of people living in hunger in the world rose to over a billion in 2009, the highest on record.