HONG KONG – The International Monetary Fund (IMF) yesterday raised its global growth forecast for this year even as it warned of renewed financial turbulence stemming from a European sovereign debt crisis that sharply raised potential risks.

The IMF projected the world economy would grow by 4.6 per cent, up from its 4.2 per cent forecast in April, reflecting “stronger activity” during the first half of this year and anticipation of fiscal action, especially in Europe.

The higher forecast was also due to “expectations of a modest but steady recovery in most advanced economies and strong growth in many emerging and developing economies“, the IMF said. It maintained its growth forecast for next year at 4.3 per cent in an update of its World Economic Outlook projections.

For Singapore, the fund projected growth of 9.9 per cent this year and 4.9 per cent in the next. Interestingly, there is also an article talking about Singapore May Pass China as Asia’s Fastest-Growing Economy from Bloomberg.

My two cents:

I think the forecast just come in handy as the stocks market have been severely oversold and waiting for a catalyst to rebound. IMF’s projection is just before Euro Stress Test Result scheduled on 23 July shows that the result might be favorable.

Yesterday the global indices stay where they are after a huge jump the day before. Market is obviously waiting for a confirmation the worst might be over, in short term at least.