Reflecting stronger global growth in the first half of 2010, the International Monetary Fund (IMF) on July 8 bumped its 2010 global GDP forecast from 4.2% to 4.6%, and restated their 2011 forecast of 4.3%. This upward revision supports the Marietta view presented in our July 5 Outlook that the global economic recovery will emerge from a current slowdown and enjoy a multiyear expansion.
The IMF projections, which reject currently fashionable predictions of a U.S. and/or global “double-dip” recession, also endorse our view that 2010 growth will be paced by the leading economies of China (10.5%), India (9.4%) and Brazil (7.1%); the U.S. (3.3%), Japan (2.4%) and the Euro Area (1.0%) will expand at a subpar recovery rate.
We pointed out in our Outlook the rising risk that the European austerity programs, the U.S. economic “soft patch,” and the efforts of the leading emerging economies to cool inflation will excessively slow growth. The IMF also expressed a similar concern regarding “how Europe deals with fiscal and financial problems, how advanced countries proceed with fiscal consolidation, and how emerging market countries rebalance their economies.” We continue to advise investors to remain vigilant and flexible.