News Analysis: World economic recovery at crucial crossroad amid mixed risks

WASHINGTON, April 20 (Xinhua) -- The world economic recovery is at a critical crossroad as global fiscal and financial risks still remain elevated despite recent moderate improvements, which is a fresh and common message from the Spring Meetings of the International Monetary Fund (IMF) and its sister agency World Bank, kicking off Friday with full swing in Washington D.C.

To push the recovery to a healthier and faster direction from the current crossroad, world finance chiefs and experts hold that advanced and emerging economies all have to boost firepower against those risks and fix their own problems. Meanwhile, IMF and other international organizations also have to play a more vital role in helping achieve this goal.

MODERATE IMPROVEMENTS

The prospects for global economy are gradually strengthening again after suffering a major setback during 2011, the IMF said in its latest World Economic Outlook (WEO) report released days prior to the Spring Meeting, adding that "some optimism" had come back.

The report projected that the world output would grow by 3.5 percent this year, 0.2 percentage point higher than the previous estimate in January. Advanced countries were expected to gain 1.4 percent, while emerging and developing economies would expand much higher at 5.7 percent.

Except a slightly better economic outlook, recent important policy steps had also brought some much-needed relief to euro area banking and government bond markets, which experienced a peak of risks in late 2011, the IMF said in its latest Global Financial Stability report.

In Euro zone, the sovereign spread is declining and bank funding markets is being reopened partly, while equity prices are recovering.

With respect to the world's largest economy, the U.S. output has gained some traction, with growth improving through 2011 and signs of expansion in the job market, the IMF added.

As some optimism has returned in recent months, the global economic recovery is facing a critical moment due to everlasting structural challenges both in advanced and emerging economies, World Bank Chief Economist Justin Yifu Lin told Xinhua.