IMF ups 2011 GDP estimates on stronger US growth

PARIS: The International Monetary Fund raised its forecast for global economic growth this year, reflecting stronger US output based on tax-cut extensions, while emerging nations lead the recovery.

The world economy will grow 4.4%, more than the 4.2% expected in October. Expansion next year is projected to reach 4.5%, unchanged from October, the IMF said on Tuesday in an update to its World Economic Outlook report.

“The world economy is recovering, but it is a two-speed recovery,” IMF chief economist Olivier Blanchard said in comments posted on the fund’s website. “Our forecast is that next year growth will be roughly the same as this year. That’s not going to be able to make a big dent to unemployment.”

While a faster-than-expected second half of 2010 helped put the world on a stronger foothold this year, the IMF warned that risks to its predictions remain “elevated.” It pressed euro-region governments to build a comprehensive plan to prevent sovereign-debt “financial stresses” from spreading out to other countries and urged emerging countries to closely watch the rise of asset price bubbles as inflation risks increase.