WASHINGTON – The International Monetary Fund today released a more optimistic forecast for the world economy’s performance next year, Bloomberg News reported.
The Washington, D.C.-based IMF raised its projection for economic growth in 2010 to 2.5 percent, up from its April projection of 1.9 percent growth next year.
The organization’s economists left their forecast for this year largely unchanged, projecting a contraction of 1.4 percent, slightly worse than the 1.3 percent contraction they predicted in April.
Although the institution’s analysts warned that recovery is likely to be “uneven” and “sluggish,” they said the rosier forecast reflected an improved outlook for emerging economies, as well as the United States and Japan, Bloomberg said.
The U.S. economy is projected to shrink by 2.6 percent this year, then grow by 0.8 percent next year, the IMF said. In April, the organization had predicted no growth for the U.S. economy in 2010.
“The global economy is still in a recession but we’re inching toward a recovery,” Olivier Blanchard, the IMF’s chief economist, said in a statement. “We have to continue with the fiscal, monetary, financial policies which we have put in place.”
Blanchard also said the U.S. may need to consider a second economic stimulus package amid growing talk of that possibility. “It may well be that if the recovery turns out to be very weak, weaker than we expect, governments may have to continue fiscal stimulus in 2010” and perhaps the year after, he said at a press conference, according to Bloomberg. “These are options that they have to be thinking about.”
The IMF report boosted the stock market, with both the S&P 500 and the Dow Jones Industrial Average up by 0.3 percent at 10:02 a.m. Amgen Inc., which has a factory in West Greenwich, rose by 16 percent after a study gave a positive review to its experimental bone-strengthening drug.
“Stocks got a lift from the IMF’s 2010 global growth projection,” said Alan Gayle, the Richmond, Virginia-based director of asset allocation at Ridgeworth Investments, which manages $60 billion. “We already know that 2009 is going to be a lousy year, in particular when it comes to corporate earnings. So that IMF revision is encouraging after the recent sell-off.”