No Double-Dip

IMF Announces ‘Unbalanced Recovery Strength’: Bad & Good Recovery News

Nat Bayjay, nat.bayjay@frontpageafricaonline.com (231-77-402737)

-Washington, DC, United States

The much anticipated double-dip in the aftermath of the world’s financial woes did not materialize, leaving prospects for developing countries like Liberia that are projected to achieve double digit growth. 

Olivier Blanchard, IMF Economic Counselor and Director of Research Department told a press briefing in the US Federal capital during a press briefing of the World Economic Outlook (WEO) that earlier fears of the downward economical trend have not materialized: “The main worry was that, in advanced economics, after an initial recovery driven by the inventory circle and fiscal stimulus, growth would fizzle.”

Announcing the good news, he added: “The inventory circle is now largely over, fiscal stimulus has turned to fiscal consolidation, but private demand has, for the most part, taken the relay.”

The WEO is a survey by the IMF staff usually published twice a year, presenting the Fund’s staff economists' analyses of global economic developments during the near and medium term.

Liberia heavily demands the IMF’s double-digit projection in its recovery drive.

With a real GDP of a little over 6% last year, the post-war nation, like many nations expects a double digit growth. With the good news that world’s economy will grow at about 4.5% a year in this year and the following, emerging and developing countries’ growth is expected to be much higher than advanced economies.

“….but with advanced economies growing at only 2.5% while emerging and developing economies grow at a much higher 6.5%”, the Director noted.

The world’s economy suffered a huge economical crush in recent years, yielding a rather slower recovery for advanced nations but faster ones for their developing counterparts.

A hopeful President Ellen Johnson-Sirleaf, during her last Annual Message, boosted of creating “strong economic foundations and the strongest recovery in twenty years” with its real GDP growing by 6.3%, up from 4.6% in 2009.

“Taking this economic performance into account and the significant level of direct foreign investment that we have been able to secure, we can expect double-digit growth over the next five years. We are, fellow Liberians, one of the twenty fastest growing economies in the world”, Sirleaf had noted.

However, Blanchard had a bad news component to this: the recovery remains unbalanced.

“In most advanced economics, output is still far below potential. Unemployment is high and low growth implies that it will remain so for many years to come”, he said.

The economic counselor maintains that emerging markets including sub-Saharan countries sustained by far less lasting wounds: “In emerging market economies by contrast, the crisis has not left lasting wounds. Their fiscal and financial positions were typically stronger to start and adverse effects of the crisis more muted.”

He said that the overall macro policy agenda for the world’s economy remains the same, “but with the passage of time, more urgent”.

On solutions, Blanchard advised that advanced countries must achieve fiscal consolidation.

Decression: Recovery and reconstruction should be the concentration in post-conflict countries