IMF: Global recovery to continue on back of emerging markets

Even as the global recovery continues to advance, the International Monetary Fund (IMF) believes that it still remains uneven as the growth in emerging markets, including the Philippines, would outpace the expansion in advanced economies particularly the US and Europe. In its latest World Economic Outlook released Tuesday, the IMF upgraded the world output as measured by the gross domestic product (GDP) to expand by 4.4 percent instead of 4.2 percent this year and by 4.5 percent next year. The institutional lender expects the global GDP to expand by 5.0 percent last year after contracting by 0.6 percent in 2009. The IMF raised the GDP growth target of advanced economies including the US, Euro area, Japan, United Kingdom, Canada and other countries by 0.3 percent to 2.5 percent instead of 2.2 percent this year after expanding by 3.0 percent. The output of advanced economies contracted by 3.4 percent in 2009. "In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the Euro area periphery are contributing to downside risks," it added. IMF said the projected growth this year and next year in advanced economies is still sluggisg considering the depth of the 2009 recession and insufficient to make a significant dent in high unemployment rate. "Nevertheless, the 2011 growth projection is an upward revision of ¼ percentage point relative to the October 2010 WEO, mostly due to a new fiscal package passed in late 2010 in the United States that is expected to boost economic growth this year by ½ percent. A package with a similar growth impact passed in Japan is expected to sustain a moderate recovery in 2011," it said. For emerging and developing markets, the IMF upgraded the GDP growth target to 6.5 percent instead of 6.4 percent this year and 6.5 percent for next year. The GDP in emerging and developing economies zoomed to 7.1 percent last year from 2.6 percent in 2009. "In many emerging economies, activity remains buoyant, inflation pressures are emerging, and there are now some signs of overheating, driven in part by strong capital inflows," the lender said. In Asia, IMF said the growth of China would ease to 9.6 percent this year from 10.3 percent last year while the growth in India would also slowdown to 8.4 percent from 9.7 percent. In both 2011 and 2012, growth in emerging and developing economies is expected to remain buoyant at 6.5 percent, a modest slowdown from the 7 percent growth registered last year and broadly unchanged from the October 2010 WEO. Growth in Southeast Asia that includes Indonesia, Malaysia, Philippines, Thailand, and Vietnam is also expected to ease to 5.5 percent this year from 6.7 percent last year. In the case of the Philippines, the IMF last month upgraded the GDP growth to 5.0 percent instead of 4.5 percent this year after surviving the global financial crisis through an effective policy response, strong external liquidity, and a sound financial sector. The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country's GDP growing by 5.0 percent to 6.0 percent last year and by 7.0 percent to 8.0 percent this year. In the first three quarters of the year, the country's GDP posted a stronger-than-expected growth of 7.5 percent from 0.7 percent in the same period last year. The GDP expansion eased to 6.5 percent in the third quarter from 8.2 percent in the second quarter and 7.8 percent in the first quarter. The Philippines barely escaped recession after its GDP growth slackened to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global economic meltdown. -- GMANews.TV