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World economy gropes on road to recovery amid mixed signs

(Xinhua)
Updated: 2009-10-02 00:27

ISTANBUL: As the International Monetary Fund (IMF) and the World Bank annual meetings approach as another arena for policy makers to discuss ways to resume and sustain growth, the world economy is scrabbling on the way out of the deepest recession since the 1930s.

Signs of stabilization are mixed with warnings for further risks. On the good side of the picture, the global economic output is forecast to increase 3.1 percent year-on-year in 2010, an upward revision of 0.6 percent from its April prediction, said an IMF report released Thursday.

A day earlier, the IMF said in another report the global financial stability "has improved" following unprecedented policy actions and signs of economic recovery, lowering its estimate of losses from the global financial and economic crisis by around US$600 billion to US$3.4 trillion.

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Triggered by a subprime mortgage meltdown that erupted in the United States in the summer of 2007, the global financial crisis and the ensuing recession have devastated banking systems, erased jobs and stagnated global trade.

As an evidence for healing wounds, the US government estimated Wednesday its economy shrank at an annual rate of 0.7 percent in the second quarter, 0.3 percentage point better than previous estimates. In the first quarter, the world's biggest economy saw its real gross domestic product (GDP) decrease 6.4 percent.

All the fresh signs echoed with previous indicators in the world's major powerhouses and built hopes for a sooner-than-expected recovery, after governments poured trillions of dollars into bank rescue and fiscal stimulus.

In the European Union (EU), seasonally adjusted GDP dipped 4.8 percent in the second quarter compared with the same period last year, but fell only 0.2 percent at a quarter-on-quarter level, according to first estimates released by Eurostat, the Statistical Office of the European Communities.

In the first quarter of this year, the quarter-on-quarter growth rate stood at minus 2.4 percent.

France and Germany have already emerged from recession in the second quarter, recording a 0.3 percent expansion from the previous quarter.

Following France and Germany, Japan's economy grew 0.6 percent in the second quarter from the previous quarter, becoming the third Group of the seventh country to return to growth as exports and domestic consumption strengthened.

Emerging economies are expected to lead the recovery, with Thursday's IMF report forecasting a 9 percent growth for China and 6.4 percent for India in 2010.

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