Released Date - January 27, 2010 WORLD – ECONOMY: AFP                                  PACNEWS BIZ: Wed 27 Jan 2010   Global economy to grow 3.9% in 2010: IMF   27 JANUARY 2010 WASHINGTON (AFP) ---- The International Monetary Fund (IMF) said the global economy was poised to rebound from last year's contraction and grow 3.9 percent, better than previous forecasts.   The IMF said the overall world economy would swing back to growth after the global decline in output of 0.8 percent last year, which it says was the first contraction since World War II, but said the recovery was still “fragile.”   The 2010 growth forecast was 0.8 percent higher than the 3.1 percent estimated four months ago, with sluggish recovery in advanced economies offset by “relatively vigorous” growth in emerging and developing economies.   “The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions,” the IMF said in an update of its October World Economic Outlook report.   The United States, the world's largest economy, was expected to post gross domestic product (GDP) growth of 2.7 percent in 2010, a sharp 1.2 percent increase from the prior forecast.   China, the emerging market leader and massive engine of the global recovery, will see growth accelerate to 10.0 percent this year, a full 1.0 percent higher than previously estimated.   The IMF held unchanged its growth forecast for Japan, saying the second-largest economy would expand at 1.7 percent.   The 16-nation eurozone's GDP was set to expand 1.0 percent, up from the prior 0.3 percent estimate.   Advanced economies overall would grow by 2.1 percent, much slower than the 6.0 percent pace seen for the emerging and developing economies.   Global production and trade bounced back in the second half of 2009, and “confidence rebounded strongly on both the financial and real fronts, as extraordinary policy support forestalled another Great Depression,” the Washington-based institution said.   An “extraordinary” amount of policy stimulus was driving the global recovery, the IMF said, noting there were still few signs that private demand not stimulated by governments was taking hold, "at least in advanced economies.   Big risks remain to the “still-fragile” recovery of GDP, a broad measure of goods and services output, the 186-nation institution said.   “A key risk is that a premature and incoherent exit from supportive policies may undermine global growth and its rebalancing,” it said.   The IMF also cited risks to economic stability from high public deficits and debt as countries eventually exit from emergency support programs. “High fiscal deficits and debt are raising concerns about sustainability and sovereign risk -- which is the primary consideration in many countries.”   Among the other considerations authorities should take into account are low interest rates “that might be contributing to asset price bubbles.”   “Crucially, there remains a pressing need to continue repairing the financial sector in advanced and the hardest-hit emerging economies.”   The IMF called for a gradual unwinding of financial sector support measures and for policymakers to “move boldly” to reform the financial sector that is at the heart of the global downturn.   Policymakers should work toward the “objectives of reducing the risks of future instability and rethinking how the potential fallout of financial crises would be borne in the future, while at the same time making the sector more effective and resilient.”…PNS (ENDS)