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Global economy gains as U.S. growth slows

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Growth in China and other emerging economies is offsetting weak U.S. and European economies and could lead to global economic gains this year and in 2011, according to The Washington Post.

The latest outlook from the International Monetary Fund (IMF) predicts the global economy will expand 4.8 percent this year (0.2 percentage points higher than July's estimate) and 4.2 percent in 2011; last year, it declined 0.6 percent, which was the worst since World War II.

IMF also forecasts the U.S. economy will grow 2.6 percent this year and 2.3 percent in 2011. Although the 2.6 percent growth predicted is below the previous estimate of 3.3 percent and is historically weak after a recession, it is a sharp reversal from the U.S. economy's 2.6 percent decline last year, which was the biggest drop since 1946.

Europe is experiencing even greater weakness. The economies of the 16 countries that use the euro are expected to grow 1.7 percent this year and 1.5 percent in 2011. Growth in Japan is predicted to be 2.8 percent in 2010 and 1.5 percent in 2011.

Emerging and developing economies are expected to expand 7.1 percent this year and 6.4 percent in 2011. IMF predicts China will grow 10.5 percent this year and 9.6 percent in 2011. Brazil's economy is expected to grow 7.5 percent this year and 4.1 percent next year.

IMF says countries with large trade and budget deficits, such as the U.S., will need to boost exports; countries with large trade surpluses, such as China, will need to reduce their dependency on exports and increase domestic demand.

More than 210 million people across the world are unemployed, which is an increase of more than 30 million since 2007 before the recession began.


10/7/2010

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