IMF raises forecast for global growth
Olivier Blanchard, Economic Counselor and Director of Research at the International Monetary Fund, at a press conference in Hong Kong -- July 8, 2010.
TEXT OF INTERVIEW
Steve Chiotakis: The International Monetary Fund has raised its forecast for global growth, including continued recovery in China and the United States. Marketplace's Stephen Beard is with us live to talk about it this morning. Hi, Stephen.
Stephen Beard: Hello, Steve.
Chiotakis: Sounds like good news, right?
Beard: Yes and no. Sorry to extinguish the glimmer of hope, but in a nutshell, the IMF is saying that global economy and the U.S. will grow faster than expected this year, but then growth will slow down next year. Looking at this year, the IMF has raised its global growth forecast, as you say, by a half of 1 percent, or 4.6 percent. That's mainly due to vigorous growth so far in Asia and solid improvement in many of the developed economies. The U.S. has done better than expected -- the IMF thinks the American economy will expand by 3.3 percent this year.
Chiotakis: But what about all the bad economic reports and worries about the slowing recovery, Stephen?
Beard: Well the IMF has taken that into account. In fact, that's why they reckoned that the rate of grwoth will decline a little bit next year in the major economies like the U.S. And they reckon it'll even dip in China, although the growth rate there remains pretty phenomenol by our standards, almost in double-digits.
Chiotakis: And if the IMF says the recovery is going to slow, what's the main reason? I mean what are they talking about this big risk?
Beard: Well the biggest threat, undoubtedly, is Europe and its debt crisis. THat's probably the biggest single risk. One optimistic note, though: the IMF doesn't believe the global economy will slip by into recession. Here's Dominic Swords, a lecturer in economics at the Henley Business School:
Dominic Swords: Actually the risk of a double-dip, even in individual countries like the U.S., like the U.K., France and Germany, the double-dip risk is quite low.
JP Morgan's chief economist says the chances of a double-dip, globally or in the U.S., are less than 15 percent.
Chiotakis: All right. Marketplace's Stephen Beard in London. Stephen, thanks.
Beard: OK, Steve.