Political Risk Latin America Blog @PolRiskLatam

IMF optimistic report but warnings about overheating in emerging economies

Posted in News and Articles, Political Risk by politicalrisklatam on April 12, 2011

by Merco Press News, April 11th, 2011.

The global economic recovery is gaining strength, with world growth projected at about 4½ percent in both 2011 and 2012, but unemployment remains high, and risks of overheating are building in emerging market economies, the IMF said in its latest forecast.

High commodity prices present new policy challenges, while old challenges––fiscal and financial repair and reform and the rebalancing of global demand–remain work in progress.

“Given the improvement in financial markets, buoyant activity in many emerging and developing economies, and growing confidence in advanced economies, economic prospects for 2011–12 are good,” the IMF said in its April 2011 World Economic Outlook (WEO). However, disruptions to oil supply pose new risks to the recovery.

“Fears have turned to commodity prices,” said Olivier Blanchard, Chief Economist at the IMF. “Commodity prices have increased more than expected, reflecting a combination of strong demand growth and a number of supply shocks. These increases conjure the specter of 1970s-style stagflation, but they appear unlikely to derail the recovery,” he told a press conference in Washington. (continue reading… )


 

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