NEW YORK - THE International Monetary Fund has revised its 2010 growth forecast sharply upwards, a source said on Thursday, while surging Chinese investment in May also fuelled hopes of a global recovery.
The IMF raised global growth estimates for 2010 to 2.4 per cent from 1.9 per cent, and confirmed its April forecast for a 1.3 per cent contraction in 2009, a G8 source who has seen the latest figures said.
REBOUND COULD BE SLOW
A record slump in Japan's first quarter gross domestic product also raised the odds that a rebound would be slow, and European officials said jobs would lag any return to growth.
Japan's economy contracted a revised 3.8 per cent in the first three months of the year, less than the initial 4.0 per cent estimate, but still the fastest pace since World War Two.
A solid auction of 30-year US debt eased recent worries over the cost of financing the nation's massive budget deficit as it attempts to climb out of recession.
Following Wednesday's disappointing 10-year auction, most gauges of demand were strong in Thursday's auction, soothing worries global appetite for US debt was slipping.
But underscoring the opacity of the outlook, World Bank President Robert Zoellick said the global economy is set to contract by close to 3 per cent this year, worse than the IMF figure and its own previous estimate of a decline of 1.75 per cent.
'I personally believe you might be able to see some aspects of recovery in 2009 and 2010, but from a policy point of view, that isn't the core question because we have a large degree of uncertainty,' Mr Zoellick told reporters.
These latest forecasts highlight the difficulty of predicting the timing of recovery, but investors are keen for further signs the economic slump is abating.
US data added to the positive view, with news that sales at retailers rose last month, while the number of workers filing new applications for jobless benefits fell for a fourth straight week last week.
'It looks like we are turning the corner. There is pretty clear evidence that the worst of the labour downturn has passed, but we still expect more job losses,' said Zach Pandl, an economist at Nomura Securities International in New York.
Although US retail sales rose 0.5 per cent in May, sales were partly boosted by increases in gasoline prices. That could add pressure to recession-weary consumers and shows the headwinds still facing a recovery.
Optimism for an economic recovery boosted US stocks, and rising oil and commodity prices lifted resource shares. Oil prices extended a three-day rally to climb above US$73 (S$106) a barrel as the International Energy Agency revised its outlook for global oil demand higher for the first time since August.
Global data has given increasing signals of a rebound from the deepest recession in six decades, driving stock markets sharply higher from a March trough. -- REUTERS
