World economy

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HONG KONG, July 8 (UPI) -- The global economy is improving enough for the International Monetary Fund to raise its prediction of growth nearly 0.5 percent.

The IMF, in a posting on its Web site, said it expected the world economy to grow 4.6 percent this year, an improvement from its previous estimate of 4.2 percent growth.

However, IMF Chief Economist Olivier Blanchard also warned, "It is clear the downside risks have risen sharply."

The IMF said its rosier outlook was attributable to stronger-than-expected growth in Asia. The IMF said it expected emerging and developing counties to average 6.75 percent growth in 2010, while the United States could expected 3.25 percent expansion, Japan was seen growing at a 2.5 percent rate and the eurozone at 1 percent.

IMF economists, at a meeting in Hong Kong, also spoke of the delicate balance of keeping government spending at levels that support growth but without increasing fears of unsustainable debt.

"While we remain cautiously optimistic about the pace of recovery, there are clearly dangers ahead," Blanchard said. "How Europe deals with fiscal and financial problems, how advanced countries proceed with fiscal consolidation, and how emerging market countries rebalance their economies, will determine the outcome."

The IMF said global policies should "focus on implementing credible plans to lower fiscal deficits over the medium term while maintaining supportive monetary conditions, accelerating financial sector reform and rebalancing global demand."