IMF Optimistic About Global Economic Growth

April 17, 2012

A man walks next to the windows of a closed shop in downtown Milan, Italy, April 12, 2012.

The International Monetary Fund says in a new report that the global economic outlook is improving. Despite a marked slowdown in Europe, the global lending institution projects the world economy will grow 3.5 percent this year, a slight improvement from its earlier forecast in January. Growth in developing countries remains brisk, but significant risks remain.

The IMF says the U.S. job market is starting to show signs of life, factory output is up sharply from recessionary lows and American consumers are spending more.

There's also good news from Europe, where coordinated efforts by the European Union may have eliminated the threat of a Greek default and lowered borrowing costs in other high debt countries.

But IMF chief economist Olivier Blanchard says the global economic picture is complicated. "Things have quieted down since but an uneasy calm remains. One has the feeling that at any moment, things could well get very bad again," he said.

Analysts point to Spain as a potential risk. Yields for Spanish bonds have doubled since March on speculation that Europe's fourth largest economy might seek financial support. But William Hobbs from VP Research says that's an unlikely scenario. "Spain is not Greece. Spain has a viable, albeit open-to-reform economy, and they have globally-respected businesses and generally an economy which we think will eventually see it through these dark times to come," he said.