IMF Raises Global Economic Growth Forecast
The world economy is finally stirring from a deep recession led by a swift turnaround in Asia, the International Monetary Fund said on Thursday, raising its forecast for global economic growth next year.
After a year of being downbeat about prospects for the world economy, the IMF's latest World Economic Outlook declared the global recession is ending.
"The global economy appears to be expanding again, pulled up by the strong performance of Asian economies, and stabilization or modest recovery elsewhere," the IMF said.
The Fund said it now expects the world economy to contract by 1.1 percent in 2009 before growing by 3.1 percent in 2010. This is more upbeat than its last update in July when the Fund projected the world economy would shrink 1.4 percent in 2009, before expanding 2.5 percent in 2010.
Over the four years starting at the end of 2010, global growth is expected to average a little more than 4 percent a year, below the 5 percent growth rates before the financial crisis erupted, the IMF report said.
While advanced economies will contract this year, they will begin a fragile recovery in 2010, the report said.
Both the United States and euro-area will post growth, albeit at a tepid pace, next year, it added.
Spain will be the only euro-area member whose economy will contract next year, the IMF said, adding that the pace of the economic decline in Europe has started to moderate.
In contrast, emerging and developing economies are further ahead in the recovery and will expand by 1.5 percent this year before rebounding 5 percent next year led by China and India, it said, also noting signs of stabilization in Latin America.
The IMF revised up China's growth forecast for next year to 9 percent from a July estimate of 8.5 percent.
The Fund said the recovery in eastern Europe, which was hardest hit by the financial crisis, will lag other emerging economies, especially the Baltic nations Latvia, Lithuania and Estonia.
Poverty could increase significantly in several developing countries where gross domestic product per capital is contracting in 2009 for the first time in a decade, the report said.
Still, the IMF cautioned that the pace of the overall global recovery is expected to be sluggish for quite some time and the biggest risk is if governments withdraw their support too soon, causing the recovery to stall.4. The other component is to ignore the earnings reality and hope for miracle of consumption ignoring extreme jobless rates ( even the phony ones). They can fake it out for a little while though by diluting the real economy with printed money - what they will do at some point to keep the illusion up but like in the 30's the hyperinflation resulting from such action will have fatal consequences.
Hopes for 2010 Overshadow Weak Earnings Season
LARGE U.S. COMPANIES are expected to turn in a ninth straight quarter of year-over-year operating profit declines for the third quarter.
But investor hopes are hinged to the fourth quarter and next year, and these expectations have helped drive up share prices in anticipation.
The stock market's seven-month rally suggests that investors believe profits and revenue will stop sliding in the fourth quarter. And they think third-quarter earnings -- expected to fall nearly 25% over last year's third quarter -- could actually beat expectations, at least modestly.
Projections for 2009 and 2010, meanwhile, have risen since May.
The sectors that analysts expect will turn in solid earnings growth next year are technology, energy, materials and consumer-discretionary companies.