October 1, 2009

IMF warns recovery could fade

The International Monetary Fund in Frankfurt, Germany, issued improved economic forecasts Thursday, but warned that the numbers could be deceiving.

The current numbers should not fool governments into thinking that the crisis is over, said IMF Chief Economist Olivier Blanchard.

In most countries, growth will be positive for the rest of the year, as well as in 2010, he said. On the other hand, huge stimulus spending programs are not sustainable and consumers are lagging in the recovery. At some point, the private sector will need to take over when government spending slows, the IMF said.

Compared to organization's July predictions, the IMF said world output would contract 1.1 percent this year, compared to an early forecast of a 0.3 percent rise. For 2010, however, the IMF now says world output will reach 3.1 percent, compared to an earlier forecast of 0.6 percent.