New York, 18 July 2008. The International Monetary Fund (IMF) has revised its growth forecasts for the global economy - and in an unusual move in the gloomy developed world it has raised them upwards.
The IMF believes that the world economy looks healthier now than it did at the start of the year, and has raised its 2008 GDP growth forecast from 3.7% to 4.1%. It expects growth to slow in 2009, but has raised the forecast slightly from 3.8% to 3.9%.
Although the forecasts are improved, they still represent a significant slowdown from the sizzling 5.2% growth figure for 2007.
It believes that the effect of the collapse of asset bubbles and the ensuing credit crunch have not been as bad as feared.
However it has growing concern around the growth in commodity prices, particularly oil and food, and believes that there will be further weakening in the second half of the year, with more downside risks.
The IMF’s previous forecasts in April were thought in many financial circles to have added fuel to the fire by being overly pessimistic. However the current forecasts may draw fire for the opposite reason, as what has been called ‘Credit Crisis Part 2’ gets into gear in the US and Europe.