Source: The Wall Street Journal                        Date: 13 April, 2011

The International Monetary Fund highlighted new risks to the economic recovery and feeble efforts to tackle existing hazards, but left its projection for global economic growth unchanged at 4.4%, from 5% last year. The risk of a major supply disruption that spikes oil to USD150-a-barrel levels and the potential for Europe's sovereign-debt crisis to spread to its core economies are the biggest threats to the global recovery, the IMF said in its annual World Economic Outlook.

Fears of a double-dip recession have faded as the global recovery gains steam, weakening the political will for world leaders to tackle some of the fundamental vulnerabilities in the global economy. Policy advice given to advanced countries last year by the IMF has "so far has been only partly heeded", said Mr. Olivier Blanchard, the IMF's chief economist. “Overall, the macro policy agenda for the world economy remains the same, but with the passage of time, it has become more urgent."

Rich countries need to slash their bloated and unsustainable budgets, reduce their mountains of debt overhang and cultivate stronger growth. Emerging nations need to let their currencies appreciate and bolster domestic demand. Unless the U.S. soon begins earnestly getting its fiscal house in order, China lets the yuan appreciate at a faster pace, and European and emerging nations implement ambitious economic restructuring, "little progress will be made with respect to rebalancing and the recovery will stand on increasingly hollow legs," the IMF warned.