IMF says global economy in ‘tough spot’ despite higher growth

WASHINGTON, July 17, 2008 (AFP) – The IMF on Thursday lifted growth forecasts modestly for the world including the United States but said the global economy is in a “tough spot” due to rising inflation amid a slowdown.

Global output is expected to climb 4.1 percent in 2008, up from its April projection of 3.7 percent, the International Monetary Fund said in an update of its April World Economic Outlook.

But the report also dramatically boosted the inflation outlook.

For 2009, the forecast calls for 3.9 percent global growth, up a notch from its earlier call of 3.8 percent.

IMF chief economist Simon Johnson said there is still “a chance of a global recession,” which many economists define by global growth below 3.0 percent.

Johnson said the overall growth picture is “roughly” the same as in April but that “the situation has become more complicated since April because of the inflation problem.”

The IMF made modest upward revisions for the United States, the eurozone, Japan and China, but suggested that the small gains in output still reflect a slowing from 2007 levels and may be overshadowed by inflation pressures.

“The global economy is in a tough spot, caught between sharply slowing