IMF World Economic Outlook October Report

Economic growth has turned positive after the deep global recession, according to the IMF's World Economic Outlook for October 2009. The main factors were wide ranging and unprecedented public interventions supporting demand and lowering uncertainty and risk in financial markets. They expect the recovery will be slow and subdued. Activity remains well below pre-crisis levels. Manufacturing and a turn in the inventory cycle are leading the recovery. Retail stability is returning and consumer confidence is growing. Looking beyond 2010 sustainable growth will depend on addressing the supply disruptions caused by the crisis and rebalancing global demand.

In the meantime, policies will have to remain focused on restoring financial health and maintaining supportive macro-economic policies until conditions improve still more. Policy makers should prepare to reduce the level of public intervention. They will have to map a course between reducing public interventions to early, risking the progress made so far, or leaving them in place too long, distorting incentives and public balance sheets. Emerging and developing economies are further ahead in the recovery due to the successes of some Asian markets. Eastern European emerging economies have been among the hardest hit and their recovery may be slower.