By Mark Deen
Sept. 24 (Bloomberg) -- The International Monetary Fund will raise its forecasts for the global economy when they are published in coming days, Managing Director Dominique Strauss- Kahn said.
“For a long time the IMF has been predicting a recovery in the first half of 2010,” Strauss-Kahn said today on France’s Europe1 radio. “When we come out with our latest forecast in the next few days, they will be a bit better,” he said, adding that 2009 will also be stronger than previously expected.
The Washington-based lender’s official forecast is currently for a global contraction of 1.4 percent this year, followed by growth of 2.5 percent in 2010. It is scheduled to release a new set of estimates on Oct. 1.
The pickup in the global economy has been helped by government stimulus packages and record-low interest rates. Straus-Kahn said that Group of 20 leaders gathering in Pittsburgh today need to be careful not to withdraw that economic support too quickly.
“We must continue the support for the economy that is already engaged,” he said, likening the coordinated fiscal and monetary effort to putting out a fire. “This is not yet the time for sponges, we’re not completely sure the fire is out. For now, the biggest risk would be to stop too quickly.”
The G-20 leaders need to look for new motors of growth as U.S. consumers collectively shift from being net borrowers to net savers, he said. While China and India will take up some of that slack, they can’t take all of it, he said.
“What happened in the past year has never existed before - - it was international coordination never seen before,” he said. “Everyone was so afraid they wanted to work together. Will the will to work together persist? That’s the question on which everything is staked.”
To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net
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