On Tuesday, the International Monetary Fund (IMF) has sharply increased its growth forecasts over the world economy in 2010 by saying that the recovery from the global financial crisis has been stronger than it is expected.

In the latest update of the World Economic Outlook, the IMF said "the world economy will expand by 3.9% in 2010, much higher than its October projection of 3.1%. It also added that next yeareconomic activity would edge up further to 4.3%."

“The global recovery is off to a stronger start than anticipated earlier but is proceeding at different speeds in the various regions,” the IMF mentioned.

It has also mentioned that the new reformation in most advanced economies will remain weak along with high unemployment rates and rising public debt posing challenges to policymakers. 

The IMF said "many central banks can afford to maintain low interest rates this year as underlying inflation is expected to remain low and unemployment high for some time."

However, it also mentioned that "there were rising concerns in some emerging market economies about the surge in capital inflows and the implications for asset prices and exchange rate pressures."

The Fund said "because of the fragile nature of the recovery, fiscal policies should remain supportive and stimulus measures planned for 2010 should be fully implemented."

Source: Livemint