NEW YORK (CNNMoney) — The outlook for the global economy has improved, but there are still major risks that policymakers need to address, the International Monetary Fund said Tuesday.
The IMF now expects global economic output to increase 3.5% in 2012, according to the latest edition of its World Economic Outlook. In January, the IMF projected a slightly weaker growth rate of 3.3%.
The fund raised its forecast for U.S. economic growth this year to 2.1% from 1.8% in January. But the outlook for Europe remains bleak, with the euro area economy expected to shrink 0.3% this year, according to the IMF.
The debt crisis in Europe and a potential spike in oil prices are the two main risks facing the global economy, the IMF warned.
“The most immediate concern is still that further escalation of the euro area crisis will trigger a much more generalized flight from risk,” the report states.
While officials in Europe have taken steps to contain the crisis, the IMF said more needs to be done to address longer-term economic problems in the eurozone….”
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