IMF sees faster growth but recovery ‘still at risk’

JOHANNESBURG, 2011 (AFP) – The global economic recovery is gaining traction but is “still at risk” because of eurozone debt worries and a lack of financial reform, the International Monetary Fund said on Tuesday. “Banks face significant funding needs now and over the next two years. In many advanced economies, we need to deal with the legacy of the crisis by resolving financial fragilities once and for all,” he added.

The IMF said a new US fiscal package passed in late 2010 was expected to boost growth in the world’s biggest economy by 0.5 percent.

The US economy had the sharpest markup by far: a 0.7 point gain to GDP growth of 3.0 percent in 2011.

However, Olivier Blanchard, the IMF’s director for research, said joblessness would continue to blight America.

“We have a long way to go… we have to accept the fact that there is going to be an unemployment problem for a long time,” he told AFP, also urging China to heed Washington’s call to speed up the yuan’s appreciation.

“It would be a good thing for China and for the rest of the world,” he said.

There was no change in the 1.5 percent growth forecast for the 17-nation eurozone or for Japan, where 1.6 percent growth is predicted.
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