Oct 2, 2009

IMF raises growth forecast, recovery fragile

NEW YORK/ISTANBUL - The International Monetary Fund raised its 2010 global growth forecast on Thursday, as factory activity picked up across Asia and Europe, and U.S. consumer spending accelerated in August to its fastest pace in nearly eight years.

Governments around the world have poured trillions into the economy and cut interest rates to historic lows to forestall an even deeper crisis, but some economists fear that turning off the taps too soon will shatter the fragile global recovery.

The IMF said the world economy will likely shrink 1.1 percent in 2009 before rebounding in 2010 to grow 3.1 percent, led by a turnaround in Asia.

In July, the IMF said it expected the global economy to expand by 2.5 percent in 2010.

But the Fund cautioned that the pace of a recovery was likely to be sluggish for some time and warned that premature withdrawal of government stimulus was a major risk.

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