(EnergyAsia, April 28 2011, Thursday) — High inflation and soaring oil prices in emerging economies create new challenges but the global economic recovery should continue, according to the latest assessment by the International Monetary Fund (IMF).
In its recently released World Economic Outlook report, the IMF has maintained its global economic growth forecasts at 4.4% for 2011 and 4.5% for 2012.
It said emerging markets such as Brazil, China, and India are at the risk of asset bubbles similar to those that caused the 2008 global financial crisis. The Fund urged these countries to guard against overheating in their economies as asset prices rise on the influx of capital inflows into emerging and developing economies from investors seeking higher returns.
Inflationary pressures are rapidly building up in developing nations as workers demand higher wages in response to rising food and fuel prices.
However, the IMF has insisted that the global expansion won’t be derailed even if oil stayed above $120 per barrel.
Countries should continue paying attention to the still struggling financial sector in Europe and the high US debt load.
The IMF has forecast the US economy to grow by 2.8% this year and 2.9% next year while growth in the euro zone will be slower at 1.6% in 2011 and 1.8% in 2012.
The agency doesn’t see a prolonged impact from the March 11 earthquake and subsequent tsunami and nuclear disaster in Japan. It has raised its forecast for Japan’s economic growth for 2012 while lowering it slightly for 2011.