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IMF raises world economic growth forecast

The International Monetary Fund is predicting global economic growth of 3.9 per cent, a rise of 0.8 points on its last forecast in October.

In its world economic outlook report the IMF said the world economy was recovering faster than anticipated after shrinking in 2009.

In 2011 it is not predicting growth of 4.3 per cent.

Anticipated growth in the coming 12 months is mainly led by China, which is expected to grow ten per cent, while the US economy is forecast to grow by 2.7 per cent - an upward revision of 1.2 points from last October.

Despite the improved forecast, the IMF has warned that countries risk a return to recession if they withdraw any post-crisis measures or fiscal stimuli too early.

"For the moment, the recovery is very much based on policy decisions and policy actions," said Olivier Blanchard, the IMF's chief economist.

"The question is when does private demand come and take over. Right now it's OK, but a year down the line; it will be a big question."

The IMF advice is at odds with the Conservative party policy in the UK, which officially came out of recession at the end of last year according to estimates released today.

The Tories plan to cut government spending in the event of a general election victory, but the government has insisted current spending should be maintained until at least the end of this year.