WASHINGTON — The rich countries whose property bubbles and collapsing banks plunged the world into recession in 2009 are now helping to lead the still-halting recovery out of it.
That is the view in the International Monetary Fund’s latest forecast, released as economic and financial leaders gather in Washington for the annual spring meetings of the fund and the World Bank.
“The recovery is strengthening; it’s becoming broader in advanced economies,” Olivier Blanchard, the fund’s chief economist, said in an interview with The Wall Street Journal. “Fundamentally, I think the economy is in good shape.”
As growth has moderated in the big emerging economies, it has strengthened in rich countries, the fund said, especially in the United States. It now sees the world economy as growing about 3.6 percent this year and 3.9 percent next year, up from 3 percent in 2013. In January, it predicted the world economy would grow about 3.7 percent this year.
“For the past five years the emerging market and developing economies have been shouldering the burden of recovery, accounting for 75 percent of the increase in global growth since 2009,” Christine Lagarde, the IMF’s managing director, said last week. “The recovery is finally becoming a bit more balanced, in an overall economic landscape that has changed significantly.”
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The forecast is one of the sunniest the fund has offered since the global recession. But it warned that growth, in many cases, remains fragile and that many economies are significantly depressed. “Downside risks continue to dominate the global growth outlook, notwithstanding some upside risks in the United States, the United Kingdom and Germany,” it said.
Indeed, even as it stressed that things are looking up in general, the IMF cut some countries’ growth forecasts to account for lingering sluggishness, internal financial problems, or new geopolitical strife, as in Ukraine.
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Rich countries are increasingly helping to power the recovery, with fiscal austerity and budget cuts slowing, banks becoming stronger, and investors taking on more risk, the fund said. The uptick has been particularly strong in the United States because of things like the Federal Reserve’s efforts to stimulate investment, improving household finances, and a nascent real estate recovery.
The US economy is providing a “major impulse to global growth.” After a slow start last year, it picked up some momentum in the second half of 2013; the monetary fund now expects it to expand about 3 percent both this year and next, up from 1.9 percent in 2013.
The euro area has finally stopped contracting, the fund said, and relief from government-imposed fiscal austerity might help that growth take seed. The drag from government cutbacks has dropped to 0.25 percent of economic output this year, from 1 percent last year. IMF economists think the euro area will grow 1.2 percent this year and 1.5 percent next year, after having contracted for the last two years.
For the major emerging economies (including China, Latin American nations like Brazil, Middle Eastern countries, and South Africa) growth should be solid if unremarkable. The fund left many of its January projections unchanged, but cut forecasts for near-term growth in sub-Saharan Africa, Russia, and lower-income countries in Europe. It also tamped down projections for Latin America, the Caribbean, and the Middle East.