IMF hikes its growth forecasts

THE global economy is starting to pull out of the worst recession since the Second World War but, with the recovery expected to be sluggish, policies need to remain supportive, the International Monetary Fund (IMF) said yesterday.<br /><br />The IMF updated its world economic outlook, revising upwards its economic growth forecast. A 1.4 per cent contraction is seen in 2009 before 2.5 per cent growth in 2010, higher than previously thought. For the UK, the IMF revised down its 2009 prediction to -4.2 per cent from -4.1 per cent but said the UK would return to growth in 2010. It hiked next year&rsquo;s forecast to 0.2 per cent, up from -0.4 per cent.<br /><br />Olivier Blanchard, chief economist at the IMF, said: &ldquo;Policy makers must continue the strong monetary, fiscal, and financial policies put in place; if they do not, there would be a great risk that the recovery falters.&rdquo;<br /><br />But there was some grim news from the US, where Federal Reserve data showed that consumer credit fell by $3.23bn (&pound;2.01bn) in May. The drop, to $2.52trillion, marked the fourth straight month of declines as unemployment grew and access to credit remained limited.