IMF says recession continues but “loosens grip”

While I was holidaying in the Black Forest last week – in a village so remote that my mobile phone didn’t work – the International Monetary Fund (IMF) said it was now more optimistic than previously about the world economy.

To sum things up, the organisation upgraded its 2010 forecasts in the wake of “unprecedented policy action” that was launched by governments around the world to save the global economy from the worst during the nasty past ten months, but at the same time it said the pace of recovery remained uncertain and was unlikely to be anything more than sluggish.

Lovely escape with no mobile connection in some places: The Black Forest, southern Germany.

In a carefully worded statement, the IMF said that “the good news is that the forces pulling the economy down are decreasing in intensity. The bad news is that forces pulling the economy up are still weak. The balance is slowly shifting, and this leads us to predict that, while the world economy is still in recession, the recovery is coming. But it is likely to be a weak recovery.”

Looking at individual key markets, the strongest upward revisions have been made for the US and Japan, and the UK figures too look better now than they did three months ago, but at the same time it’s worth stressing that from a wider perspective the 2009 figures for countries such as Germany, Japan, Spain, Italy, Russia and Mexico continue to make for sobering reading.

On the global level, the economy is now expected to contract by 1.4% in real terms in 2009 before growing by 2.5% in 2010. This 2010 forecast compares with an expectation of 1.9% promoted just three months ago, which underlines the point that the outlook is improving visibly.

For anyone interested in the details, the full press release is available here and the figures can be found in the table below (click on it to see a larger version).

Have a good week!

Boris