GEORGETOWN, Guyana (GINA) -- The World Economic and Financial Survey 2012 from the International Monetary Fund indicates that global growth has increased to 3.6 percent (seasonally adjusted annual rate) in the first quarter of 2012. The IMF report released on Monday said the surprising upside is that growth has moved up by quarter percentage point compared with the forecasts presented in the April 2012 World Economic Outlook.
The growth projections for Latin America and the Caribbean in April 2012 stood at 3.4% for 2012 and 4.2% for 2013. However, the new projections from the IMF states that growth for the region now stands at 3.5% for 2012 and 5.1% for 2013.
The IMF also noted that the upward movement was partly due to temporary factors, among them easing financial conditions and recovering confidence in response to the European Central Bank's (ECB's) longer-term refinancing operations (LTROs).
However, growth in a number of major emerging market economies has been lower than forecast. Partly because of a somewhat better-than-expected first quarter, the revised baseline projections in this WEO Update suggest that these developments will only result in a minor setback to the global outlook, with global growth at 3.5 percent in 2012 and 3.9 percent in 2013, marginally lower than in the April 2012 World Economic Outlook, the report stated.
These forecasts, according to the IMF, clearly show that downside risks continue to reflect risks of delayed or insufficient policy action. Pointing out that measures announced at the European Union (EU) leaders' summit in June are steps in the right direction, the IMF has warned that at timely implementation of these measures, together with further progress on banking and fiscal union, must be a priority.
Guyana recorded 5.4 percent growth in 2011 and the projected 4.1 percent for 2012 are clear indications of government’s resilience towards promoting the development of a more diversified productive base.
An IMF regional international outlook identified Guyana among the resource exporting countries of the Caribbean, and by extension, the most outstanding economic performer of recent years.
In reports from the Caribbean Development Bank (CDB) Guyana was again acclaimed as one of the principal drivers of growth in the Caribbean.
Global growth weak through 2012
The baseline projections in the latest update incorporate weaker growth through much of the second half of 2012 in both advanced and key emerging market economies, reflecting the setbacks to the global recovery.
The projections assume that financial conditions that policymakers will follow up on the positive decisions agreed upon at the June EU leaders' summit and will take action as needed if conditions deteriorate further.
In view of a stronger-than-expected first quarter outcome, weaker global growth in the second half of 2012 will primarily affect annual growth in 2013 through base effects.
In the near term, activity in many emerging market economies is expected to be supported by the policy easing that began in late 2011 or early 2012 and, in net fuel importers, by lower oil prices, depending on the extent of the pass-through to domestic retail prices.
Global consumer price inflation is projected to ease as demand softens and commodity prices recede. Overall, headline inflation is expected to slip from 4½ percent in the last quarter of 2011 to 3–3½ percent in 2012–13.
The global recovery remains at risk
Among low-income countries, those dependent on aid, face risks of lower-than-expected budget support from advanced economies, while commodity exporters are vulnerable to further erosion of commodity prices.
On the positive side, oil price risks have abated in recent months, reflecting the interaction of changes in prospective market conditions and perceived geopolitical risks.
Supply conditions have improved due to increased production in Saudi Arabia and other key exporters, while demand prospects have weakened and are subject to downside risks. With geopolitical risks to oil supply widely perceived to have declined, risks to oil price projections appear more evenly balanced now, while those around prices of non-oil commodities tilt downward, the report stated.