IMF:World Economic Outlook Slowly Improving but Remains Fragile

The main risks to continuing growth are the still fragile situation in Europe where a renewed crisis remains possible and the oil price factor.Emerging markets and developing countries are doing relatively well. 

The IMF raised its projection for the United States to 2.1 percent this year and 2.4 percent next year from 1.7 percent in 2011. It still projects a mild contraction in the Eurozone due to fears over sovereign debt and fiscal consolidation although Germany and France might see some growth.Spain, Italy, Greece and Portugal will only  begin to see recovery in 2013.

Global growth is projected to drop from close to 4 percent in 2011 to about 3½ percent this year, picking up to 4.1 percent next  year. Japan recovering from the earthquake and tsunami last year is expected to see growth of 2 per cent. Growth in Asia although affected by lower external demand remains the brightest economic prospect at 6 per cent with China at 8.2 percent and India  at 6.9 per cent. Russia and the CIS will see 4.2  percent growth and Latin American growth will moderate  to 3.75 per cent  in 2012 and  4 per cent in 2013.


For the Middle East and North Africa. Growth in the region’s oil importers will be constrained by strong oil prices, anemic tourism associated with the social unrest in the region, and lower trade and remittance flows reflecting the ongoing problems in Europe. Among oil exporters, negative developments in the Islamic Republic of Iran are projected to be offset by increased oil production in Iraq and Saudi Arabia and a bounce back in Libya. Algeria is expected to see GDP growth of 3.1% in 2012 and 3.4% in 2013, against 2.5% in 2011 notes APS. Overall growth for the region is forecast at 4.2 percent in 2012, with oil producers buoyed by continued high oil prices, but inflation will average 9.5 percent.

In Sub-Saharan Africa. The pace of growth is projected to pick up in 2012 to 5.4 percent, with the region relatively less exposed to the global slowdown but not immune to spillovers from the euro area’s problems. South Africa, which has stronger trade and financial ties with slowing Europe, is struggling with subpar growth and high unemployment.