IMF raises global growth forecast to 3.5%

US: The International Monetary Fund on Tuesday hiked its global growth forecasts but warned the outlook was “very fragile” and could be shattered by Europe's debt crisis and high oil prices.

The IMF estimated global growth at an annual rate of 3.5 percent this year, accelerating to 4.1 percent in 2013.

The forecasts reflected an upgrade from the January forecast of 3.3 percent and 4.0 percent, respectively. “The outlook for the global economy is slowly improving again but is still very fragile,” the IMF said in a twice-yearly report.

The IMF raised its growth estimate for the advanced economies to 1.4 percent for 2012.

China continued to be the global driver. The world's second-largest economy was forecast to grow at 8.2 percent, slightly stronger than previously believed. The improved global forecasts since January were due in part from better global financial conditions and easing fears about the eurozone debt crisis, the IMF said.

Reconstruction in Japan and Thailand, following natural disasters, also helped to foster growth in Asia. “Policy has played an important role in recent improvements, but various fundamental problems remain unresolved,” said the IMF, considered the global lender of last resort for troubled member countries. The fund cited the European Central Bank's pumping cash into the eurozone banking system, the expansion of a eurozone firewall to contain the debt crisis and structural reforms aimed at restoring financial health.

AFP