(Adds background, details)
By James Mackenzie and Anna Willard
PARIS, June 25 (Reuters) - The International Monetary Fund
is likely to raise its forecasts for the world economy within
weeks as the financial crisis shows signs of easing, a senior
official said on Thursday, though he warned that serious
problems remained in some emerging regions.
"After two quarters of sharp contraction, signs are emerging
that the rate of decline in global output is moderating," IMF
First Deputy Managing Director John Lipsky told a conference
organised by the Paris Club of official creditor nations.
"In the upcoming weeks, we will be updating our global
growth forecasts and will likely revise modestly upward our
projections, particularly for 2010."
His comments were the latest in a series from policymakers
and officials that suggest the most severe phase of the crisis
may be past, and an uncertain period of stabilisation followed
by gradual recovery lies ahead.
The IMF's latest outlook for global GDP, issued in April,
forecast world output to decline by 1.3 percent in 2009 and grow
by 1.9 percent in 2010. It is due to present updated forecasts
on July 7.
Lipsky said problems in accessing outside finance and weak
demand from export markets were still weighing heavily and
recovery in emerging markets would depend on a pickup in the
advanced economies.
"Modest recovery" this year and next would be led from Asia,
where both China and India are expected to see revival, while
activity in Latin America would also stabilise but there were
more serious concerns in eastern and central Europe, he said.
LATVIA
Both Lipsky and European Central Bank governing council
member Christian Noyer said that Baltic countries like Latvia,
which is struggling to defend its lat currency peg to the euro,
would not be helped by joining the single currency prematurely.
"It's in the interest of candidate countries not to enter
too early because it risks making the economic situation
unbearable," Noyer, speaking on the same panel discussion, said.
Latvia, which is facing an almost 20 percent slump in GDP
after years of unsustainable growth and a housing bubble, has
made euro zone entry part of its plan to fight the crisis but
Lipsky said currency policy alone was not enough.
"If there is a solution it begins with macro policies," he
said. "No single exchange rates solution, or exchange regime
represents a solution to these kinds of problems."
"What is important is that the currency regime is credible
and coherent," he said.
Latvia aims to join the euro in 2013, and is trying hard to
keep its peg as most loans to private individuals and businesses
were in the single currency and any devaluation could lead to
payment defaults that would hit banks hard.
It has passed austerity measures, including a 10 percent cut
in pensions and a 20 percent cut in state salaries to help
secure a 7.5 billion euros IMF-led rescue package. Analysts say
failure to fight its way out of the crisis would likely spell
further trouble for other of the EU's eastern European wing.
(Editing by Patrick Graham)
