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IMF forecasts economy rebound
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The International Monetary Fund says the global economy has recovered more quickly than expected but emergency rescue efforts have worsened public finances.
It cautioned that countries are vulnerable to new shocks.
The IMF's chief economist Olivier Blanchard, presented the findings of the latest World Economic Outlook in Washington DC on Wednesday.
The IMF forecasts that global growth will rise 4.2 percent this year, but said growth for more developed economies, may be slower.
Olivier Blanchard, IMF Chief Economist, said, "When it comes to advanced economies we forecast growth to be 2.3 percent for 2010 and 2.4 percent of 2011 and this is just not enough to make up for growth lost during the recession."
The IMF said that many major economies exhausted their resources, hopping to avert another great depression. Consequently, this has created a new set of problems.
The IMF warned the recovery remained vulnerable with the biggest threat likely to come from a surge in government debt burdens.
Olivier Blanchard, IMF Chief Economist, said, "Achieving strong, sustained and balanced growth will not be easy; it will require more work, namely fiscal consolidation in advanced countries, exchange rate adjustments, the re-balancing of demand across the world - these are the tasks facing policymakers over the next few years."
The IMF also suggested that developed economies may need to "depreciate their currencies, to increase their net exports," while emerging and developing countries should "let their currencies appreciate, to reduce their net exports".
