The International Monetary Fund (IMF) and the World Bank concluded their annual meetings Wednesday, calling for continuous policy support as the world economy is still precarious.

World on road of recovery

"Recovery" became the main theme of delegates' speech in this year's annual meetings. In its latest World Economic Outlook (WEO),the IMF predicted that the global economy would grow by 3.1 percent in 2010, 0.6 percent higher than its prediction in July, saying the global recession "is ending."

Global financial stability has also improved following unprecedented policy actions and signs of economic recovery, the IMF said in the Global Financial Stability Report (GFSR).

The IMF lowered its estimate of losses from the global financial and economic crisis to US$3.4 trillion, around US$600 billion lower than its last report in April, largely due to rising securities values, the report said.

Asia is leading the world economy out of the crisis, Anoop Singh, director of the IMF's Asia and Pacific Department, told reporters.

The latest WEO projected that Asia will grow 2.8 percent this year and 5.8 percent in 2010, which is far better than other regions in the world.

The advanced economies are also expected to walk out the negative territory and achieve slight growth next year. The projection of economic growth in 2010 for the US stood at 1.3 percent, and the euro zone as a whole at 0.3 percent.

Cautious optimism voiced

Despite the bright outlook, the World Bank and the IMF at the same time expressed some cautions towards their prediction of the world economic growth.

World Bank President Robert Zoellick said the year 2010 would be "a highly uncertain economic year" when much of the stimulus action will run out.

"We may have broken the fall in financial market but we are still some way from a self-sustaining economic recovery that provides more jobs, higher incomes, and expanded opportunities," Zoellick said.

The World Bank chief said the risks include growing unemployment lines, rising protectionism, and still-large output gaps.

"The global economy could still suffer a setback, not least in 2010 when governments plan to withdraw much of their economic stimulus and debt rollovers could be combined with a rise in interest rates," he said.

"It is still not clear who will replace the US consumer as a source of demand. The global engines of growth may have stuttered back to life, but it could easily stall," he added.

Turkish President Abdullah Gul said during the annual meetings that it was still early to say the global crisis was over, adding that problems in developing countries, particularly the problems in financial sector in Europe, had not been totally overcome yet.

Continuous policy support urged

Officials to the meetings urged for a continuous supportive economic policy to secure the recovery.

In tackling the risks and uncertainties in current world economy, the IMF suggested in its WEO that the key policy priorities should remain to restore the health of the financial sector and to maintain supportive macroeconomic policies until the recovery is on a firm footing.

Zoellick said "If the crisis wanes, there will be a natural tendency to return to business as usual, and it will become harder to convince countries to cooperate in order to address many of the problems that led to this crisis, and the problems that we will face coming out of the crisis."

"Therefore, we have to seize this moment to press reform," he added.

Zoellick called for pressing ahead with the voting reform at the World Bank and the IMF, saying a multi-polar economy which is less reliant on the United States will be a more stable world economy.

The political economy of the 21st century demanded a changed order that reflects the growing role of developing countries, which are now a source of potential economic growth that could lead to a more balanced world economy, he told the meeting.

Chinese Finance Minister Xie Xuren said China would continue to implement the proactive fiscal policy and moderately ease monetary policy to support growth as the rebound is yet to be stable.

(Xinhua News Agency October 8, 2009)