International Monetary Fund Report

IMF has put out a report which suggests that this recession might well be at its bottom and there is recovery ahead.

IMF has stated today that India’s economy would grow by 6.5% in 2010, compared with the April forecast of 5.6%. It has stated that sectors with strong domestic demand – auto and FMCG are expected to see very good growth.

In an update of its World Economic Outlook, the IMF said the global economy is likely to contract 1.4% this year, marginally lower than the 1.3% decline it projected in April. It now sees world growth strengthening to 2.5% in 2010, compared to an April forecast of 1.9%. The report has said that the global economy is slowly starting to pull out of its deepest recession since World War Two but a recovery will be sluggish and policies would need to remain supportive.

IMF states that while the world economy is still in recession, the recovery is coming but it is likely to be a weak recovery and emphasized that confidence in the financial sector would not return until toxic debts were removed from banks' balance sheets and frail institutions recapitalized. The IMF report warns an economic recovery still depends on government intervention. It says governments need to continue pushing stimulus measures, including increased spending or greater tax cuts, through 2010.

The revised IMF forecast says the U.S. economy will shrink 2.6% in 2009 and grow by 0.75% next year, rather than the 0% it forecast earlier this year. China's economy is now forecast to grow 7.5 percent this year. The IMF lowered its expectations for growth in Africa, the Middle East and Latin America, as they have been more hurt than the rest of the world. It expects Europe to show a much slower than expected growth in 2009 but in 2010 would grow faster than expected.

The Asian economies are expected to do much better but IMF has also warned that the growth in these countries could slow if the economic recovery fails to take hold in advanced economies.

This is not like a glowing report on the world economy from IMF but then at least for a change, there is something positive. At least there is the promise of recovery and that is good enough for now.