IMF predicts slow recovery next year

The global economy is projected to shrink by 1.3% in 2009, with a slow recovery expected to take hold next year, according to the IMF’s April World Economic Outlook (WEO). Growth is projected to reemerge in 2010, but at 1.9% it would be sluggish relative to past recoveries. IMF chief economist Olivier Blanchard said last week that there was light at the end of the tunnel. “World growth can turn positive by the end of this year, and unemployment can start decreasing by the end of next year,” he said. “The immediate imperative is to move boldly with credible plans to deal with the financial crisis that has been at the core of the global recession over the past six months.” In parallel with the rapid cooling of global activity, inflation pressures have subsided quickly, he added. Commodity prices fell sharply from mid-year highs, causing an especially large loss of income for the Middle Eastern and CIS economies but also for many other commodity exporters in Latin America and Africa.