By Christine St Anne *
The last couple of months have seen some spectacular dips in the Australian sharemarket. While not as extreme as the global financial crisis three years ago, the relentless market volatility has tested the mettle of many investors.
In times like these, it is crucial investors maintain their focus on long-term investing. Below, Westpac Financial Planning executive financial planner David Simon and HLB Mann Judd partner in wealth management Jonathan Philpot have outlined some lessons investors can take from these volatile times.
1. Block out the noise
There is no doubt that bad news sells. Sovereign debt problems following a possible default in Greece continue to feed the frenzy of media reports.
These reports have added to investor unease. Philpot suggests the best strategy for investors is to "block it all out".
"From an adviser perspective, we are paying too much attention to market events. We try to work out what is going on with economic events. If the experts don't know what is going on, what hope has an investor got?"
Often, in extreme market events, investors get spooked, including retirees who are known for selling down in favour of cash.
"Retirees are taking a huge risk trying to make these calls. It is best not to base investment decisions on what is going on, but rather invest according to your goals," Philpot says.
2. Make tweaks - not wholesale changes
Market dips can provide investors with an opportunity to review their asset allocation. A typical balanced portfolio includes investments across a range of asset classes including equities, fixed income, property and cash.
"During times like this, equities tend to fall at a disproportionate level to other asset classes like cash and fixed income. Investors can rebalance their portfolio to their original risk profile by taking some of their investments in cash and fixed income and replenishing their equity portfolio," Simon says.
"This approach allows investors to sell some assets at higher prices and buy other assets at lower prices."
Philpot says investors need to be cautious with this approach, given that markets can be hit by extreme movements during volatility.
An investment rollover or fund redemption can sometimes take weeks to finalise and by then the market could have moved four or five points.
"In making portfolio changes, investors should avoid making wholesale changes that involve moving large investments around, but a bit of tinkering is fine," Philpot says.
3. Keep an eye on your income
For retirees, income in their portfolio plays a critical role in retirement. To boost their income, some retirees have been forced to sell their shares in falling markets.
Simon says retirees need to ensure they have enough liquidity in their portfolio, which prevents them from having to resort to an asset "fire sale".
"Retirees should have three years of the income portion of their portfolio in defensive assets, including an adequate level of cash. This will help them avoid selling assets prematurely," he says.
Term deposits have proven to be very attractive to income-seeking investors given their interest rates. Philpot says investors should continue to compare the returns of these term deposits to sharemarket returns.
Despite the fall in the Australian equity markets, companies have continued to pay out dividends, with many even increasing their dividends.
At the same time, the big four banks have moved to cut their term deposit rates from 6 per cent to around 5 per cent.
"Although the sharemarket has been going backwards, dividends have been increasing. For retirees wanting income to fund their pension, this is a good sign," Philpot says.
"Term deposits no longer have the same headline returns. These investments have fallen by 10 per cent, yet the sharemarket has only fallen by 3 per cent. It's interesting that this has somehow slipped under the media's radar."
4. Look at dollar-cost averaging
Making regular investments over a period of time can help investors avoid extreme portfolio movements that come from market dips.
"Often investors feel they need to invest all their income in one single point in time. Dollar-cost averaging allows investors to make regular investments over a period of time rather than all at once," Simon says.
"This prevents investors from buying at the peak of the market."
5. Old rules still apply - diversify
One of the most fundament rules to investing is diversification.
Investors should avoid having a concentration in one asset or to one asset class, Simon says.
* Christine St Anne is Morningstar's online funds and ETFs editor.
Source: Morningstar
Tuesday, September 20, 2011
ATO targets tax cheats
The Australian Taxation Office continued to shine a spotlight on tax cheats during tax time: stopping over 70,000 possibly fraudulent refund cheques worth over $220 million since 1 July.
"If you try and cheat the system - it is not a matter if we will find you, but when," Tax Commissioner Michael D'Ascenzo said.
"We are constantly increasing our sophisticated technical and relationship networks to close the net on those doing the wrong thing.
"Tax funds the lifestyle we enjoy in Australia, including vital community and government services.
"Those who do the wrong thing burden the vast majority of the community who do the right thing and fulfil their civic and legal responsibilities.
"As a reminder of our vigilant stance on tax crime at all levels, I am pleased to also announce the latest issue of our free e-magazine Targeting Tax Crime.
"This issue includes a range of articles and interviews about our whole of government approach to fighting tax crime and I encourage you to have a read."
You can download the latest issue of Targeting Tax Crime. The latest issue includes articles on various topics including the cash economy, Project Wickenby and the international fight against tax evasion and avoidance.
"If you try and cheat the system - it is not a matter if we will find you, but when," Tax Commissioner Michael D'Ascenzo said.
"We are constantly increasing our sophisticated technical and relationship networks to close the net on those doing the wrong thing.
"Tax funds the lifestyle we enjoy in Australia, including vital community and government services.
"Those who do the wrong thing burden the vast majority of the community who do the right thing and fulfil their civic and legal responsibilities.
"As a reminder of our vigilant stance on tax crime at all levels, I am pleased to also announce the latest issue of our free e-magazine Targeting Tax Crime.
"This issue includes a range of articles and interviews about our whole of government approach to fighting tax crime and I encourage you to have a read."
You can download the latest issue of Targeting Tax Crime. The latest issue includes articles on various topics including the cash economy, Project Wickenby and the international fight against tax evasion and avoidance.
Source: ato.gov.au
ASIC probe leads to jail term
Mr Nebojsa Jovicic, of Robina on the Gold Coast, has been sentenced to seven years imprisonment on seven charges of misappropriation brought by the Australian Securities and Investment Commission. The sentences are to be served concurrently.
Mr Jovicic, 45, pleaded guilty in the Southport District Court to seven counts of defrauding investors, located on the Gold Coast and Brisbane, who were induced to pay a total of approximately $675,000 to Perpetual Acquisitions Pty Ltd and Robina Properties (Qld) Pty Ltd.
The conviction follows an ASIC investigation into a purported investment scheme run by Mr Jovicic between 1 January 2005 and 8 May 2006. Mr Jovicic met with potential investors in private homes and at some other venues in Brisbane, Southport and Bundaberg, on the promise of returns of 50 per cent per annum. He claimed to have secured their investments with interests in units at Mount Panorama Resort, New South Wales, and properties in Fiji.
The investors were vulnerable and inexperienced investors. The Judge noted that they had modest means and their financial situations had been severely affected for the foreseeable future. Many of them are of retirement age and had borrowed through mortgages to invest. They will not get their money back and are now forced to continue working to pay off their loans.
The investigation found that Mr Jovicic had paid substantial funds received from investors to himself which was used for personal expenses and large unexplained cash withdrawals. Some of the money had been used to pay the interest to other investors in a ponzi-style scheme.
‘Mr Jovicic’s conduct involved a gross breach of trust of the investors. His actions were very serious and have left his victims in difficult financial positions. His jailing should send a strong message that ASIC will act to ensure those who deliberately misuse and misappropriate investors money are brought to account’, ASIC Deputy Chair, Ms Belinda Gibson said.
‘The experience of the investors in this matter should serve as a timely reminder to investors to beware of returns that sound too good to be true. Before you invest in any scheme, you should do independent checks to see how the returns are really going to be made and don’t just trust the word of the person selling you the scheme’, Ms Gibson added. More information about ponzi schemes and other investment schemes can be found on ASIC’s Moneysmart website at www.moneysmart.gov.au.
Mr Jovicic will be eligible for parole on 23 December 2013.
The Commonwealth Director of Public Prosecutions prosecuted the matter.
Source: ASIC
Mr Jovicic, 45, pleaded guilty in the Southport District Court to seven counts of defrauding investors, located on the Gold Coast and Brisbane, who were induced to pay a total of approximately $675,000 to Perpetual Acquisitions Pty Ltd and Robina Properties (Qld) Pty Ltd.
The conviction follows an ASIC investigation into a purported investment scheme run by Mr Jovicic between 1 January 2005 and 8 May 2006. Mr Jovicic met with potential investors in private homes and at some other venues in Brisbane, Southport and Bundaberg, on the promise of returns of 50 per cent per annum. He claimed to have secured their investments with interests in units at Mount Panorama Resort, New South Wales, and properties in Fiji.
The investors were vulnerable and inexperienced investors. The Judge noted that they had modest means and their financial situations had been severely affected for the foreseeable future. Many of them are of retirement age and had borrowed through mortgages to invest. They will not get their money back and are now forced to continue working to pay off their loans.
The investigation found that Mr Jovicic had paid substantial funds received from investors to himself which was used for personal expenses and large unexplained cash withdrawals. Some of the money had been used to pay the interest to other investors in a ponzi-style scheme.
‘Mr Jovicic’s conduct involved a gross breach of trust of the investors. His actions were very serious and have left his victims in difficult financial positions. His jailing should send a strong message that ASIC will act to ensure those who deliberately misuse and misappropriate investors money are brought to account’, ASIC Deputy Chair, Ms Belinda Gibson said.
‘The experience of the investors in this matter should serve as a timely reminder to investors to beware of returns that sound too good to be true. Before you invest in any scheme, you should do independent checks to see how the returns are really going to be made and don’t just trust the word of the person selling you the scheme’, Ms Gibson added. More information about ponzi schemes and other investment schemes can be found on ASIC’s Moneysmart website at www.moneysmart.gov.au.
Mr Jovicic will be eligible for parole on 23 December 2013.
The Commonwealth Director of Public Prosecutions prosecuted the matter.
Source: ASIC
Sunday, March 27, 2011
Hope for shares
Experts see some upside for Aussie stocks, despite the current turbulent economic times.
"Our expectation of a softer Australian dollar in the second half of 2011 (92 US cents by year end) should boost interest from foreign investors - a group owning 40 to 45 per cent of our shares - and high corporate profits do point to a firmer sharemarket as well," says CommSec's Craig James, who sees the market dipping to 4900 mid-year and then recovering slightly by the end of December.
Toby Walker, Australian equity strategist at Morgan Stanley, says the investment house has not lowered its view of the stockmarket on the back of recent offshore events, including the Japanese catastrophe.
He says Morgan Stanley believes domestic market fundamentals remain intact.
"We are still looking for a reasonable year for equities this year, driven by earnings growth, particularly mining earnings growth," Walker says.
He adds that commodity price rises already seen are flowing into mining earnings but capital expenditure (capex), particularly mining capex, has yet to flow to the domestic sectors that service the resources industry.
"We are looking for 20 per cent growth this year, and not much [price-earnings] multiple expansion," Walker says, suggesting valuations remain attractively low.
"Our index target is 5350."
Last week BHP said it has approved US$9.5 billion worth of investments in its iron ore and coal operations, including US$6.6 billion to continue production growth at its West Australian iron ore operations.
Deutsche Bank equities strategist Tim Baker says the increased capex will help drive consumer spending, which in turn will help drive a more robust showing by industrial companies which have largely lagged their resources counterparts in earnings and share price growth.
Baker sees the benchmark stocks index at 5500 by the end of the calendar year, making him the biggest bull of the four forecasters polled here.
He says the forecast is driven, in part, by the market's relatively cheap price-earnings multiple, well below its traditional 14 or 15 times forward earnings.
"We're at a very attractive valuation of about 11 times," Baker says.
He adds that strong commodities prices will support the economy, and the stronger economy will help drive the keenly awaited pick-up in the industrial sector.
Source: Morningstar
"Our expectation of a softer Australian dollar in the second half of 2011 (92 US cents by year end) should boost interest from foreign investors - a group owning 40 to 45 per cent of our shares - and high corporate profits do point to a firmer sharemarket as well," says CommSec's Craig James, who sees the market dipping to 4900 mid-year and then recovering slightly by the end of December.
Toby Walker, Australian equity strategist at Morgan Stanley, says the investment house has not lowered its view of the stockmarket on the back of recent offshore events, including the Japanese catastrophe.
He says Morgan Stanley believes domestic market fundamentals remain intact.
"We are still looking for a reasonable year for equities this year, driven by earnings growth, particularly mining earnings growth," Walker says.
He adds that commodity price rises already seen are flowing into mining earnings but capital expenditure (capex), particularly mining capex, has yet to flow to the domestic sectors that service the resources industry.
"We are looking for 20 per cent growth this year, and not much [price-earnings] multiple expansion," Walker says, suggesting valuations remain attractively low.
"Our index target is 5350."
Last week BHP said it has approved US$9.5 billion worth of investments in its iron ore and coal operations, including US$6.6 billion to continue production growth at its West Australian iron ore operations.
Deutsche Bank equities strategist Tim Baker says the increased capex will help drive consumer spending, which in turn will help drive a more robust showing by industrial companies which have largely lagged their resources counterparts in earnings and share price growth.
Baker sees the benchmark stocks index at 5500 by the end of the calendar year, making him the biggest bull of the four forecasters polled here.
He says the forecast is driven, in part, by the market's relatively cheap price-earnings multiple, well below its traditional 14 or 15 times forward earnings.
"We're at a very attractive valuation of about 11 times," Baker says.
He adds that strong commodities prices will support the economy, and the stronger economy will help drive the keenly awaited pick-up in the industrial sector.
Source: Morningstar
Subdued outlook for Aussie stocks
By Victoria Tait *
Natural disasters in Japan, New Zealand and Australia, as well as ongoing fighting in the Middle East and North Africa, have led some economists and strategists to lower their 2011 forecasts for Australian stocks.
Calendar year 2011 has brought one disaster after another with floods in Australia, earthquakes in New Zealand, and most recently, the quake, tsunami and nuclear damage in Japan rocking the region.
"The cause and effect is that GDP in Australia is going to be fairly soft," Morningstar's head of equity strategy Ross Bird says.
As a result, Bird has scaled down his forecast for the S&P/ASX 200 index to around 5100 by the end of calendar 2011 from his 5300 forecast set out in December.
"It's just because of the lost economic opportunity arising from the natural disasters. Some of that will be added back later in the year as reconstruction commences," he says.
CommSec chief economist Craig James says recent events have hit investor sentiment, resulting in a downward revision to his forecast.
"The Japanese earthquake, tsunami and nuclear shock have clearly had a depressing influence on investor confidence, together with air strikes against Libya," he says.
James says that even without events in Japan and North Africa, which have dominated headlines for the past few weeks, foreign investors' enthusiasm for Australian shares has waned due to a stalled economy.
The mining resource rent tax and the proposed carbon tax are expected to further dampen the nation's economic outlook, he says. On top of all that, the strong Australian dollar is making domestic shares relatively expensive, he says.
Even China, the bright spot, may not be enough to restore enthusiasm.
"Sure, China continues to expand, boosting earnings and profits for resource companies. But mining represents just 9 per cent of the economy," James says.
"It is the other 91 per cent that investors are worried about."
CommSec expects the S&P/ASX 200 index to stand at about 4900 points by the middle of the year and 5200 by the end of the year.
* Victoria Tait is Morningstar's online stocks editor.
Natural disasters in Japan, New Zealand and Australia, as well as ongoing fighting in the Middle East and North Africa, have led some economists and strategists to lower their 2011 forecasts for Australian stocks.
Calendar year 2011 has brought one disaster after another with floods in Australia, earthquakes in New Zealand, and most recently, the quake, tsunami and nuclear damage in Japan rocking the region.
"The cause and effect is that GDP in Australia is going to be fairly soft," Morningstar's head of equity strategy Ross Bird says.
As a result, Bird has scaled down his forecast for the S&P/ASX 200 index to around 5100 by the end of calendar 2011 from his 5300 forecast set out in December.
"It's just because of the lost economic opportunity arising from the natural disasters. Some of that will be added back later in the year as reconstruction commences," he says.
CommSec chief economist Craig James says recent events have hit investor sentiment, resulting in a downward revision to his forecast.
"The Japanese earthquake, tsunami and nuclear shock have clearly had a depressing influence on investor confidence, together with air strikes against Libya," he says.
James says that even without events in Japan and North Africa, which have dominated headlines for the past few weeks, foreign investors' enthusiasm for Australian shares has waned due to a stalled economy.
The mining resource rent tax and the proposed carbon tax are expected to further dampen the nation's economic outlook, he says. On top of all that, the strong Australian dollar is making domestic shares relatively expensive, he says.
Even China, the bright spot, may not be enough to restore enthusiasm.
"Sure, China continues to expand, boosting earnings and profits for resource companies. But mining represents just 9 per cent of the economy," James says.
"It is the other 91 per cent that investors are worried about."
CommSec expects the S&P/ASX 200 index to stand at about 4900 points by the middle of the year and 5200 by the end of the year.
* Victoria Tait is Morningstar's online stocks editor.
Thursday, January 27, 2011
December quarter CPI below expectations
By
Nicholas Grove is a Morningstar journalist.
Australia's consumer price index (CPI) rose 0.4 per cent in the December quarter 2010, following a rise of 0.7 per cent in the September quarter, the Australian Bureau of Statistics (ABS) said.
The figure was below economists' expectations, which ranged from 0.6 per cent to 0.9 per cent.
The most significant price rises were for fruit, vegetables, domestic holiday travel and accommodation, and automotive fuel, the ABS said.
Offsetting this were price falls in pharmaceuticals, deposit and loan facilities, motor vehicles, audio-visual and computing equipment, and motor vehicle repairs, it said.
The CPI rose 2.7 per cent for the year to December quarter 2010, compared with a rise of 2.8 per cent through the year to September quarter 2010, the ABS said.
According to CommSec economist Savanth Sebastian, the inflation reading all but ensures that interest rates will remain on hold next week.
"And given that interest rate settings are already restrictive, it is looking likely that the next rate hike will not take place until well into the June quarter - especially given that there are parts of the economy like construction, manufacturing and the services sector going backwards," he said in a note.
"There is no question that inflationary pressures remain the hot button issue for the Reserve Bank.
"But not only is inflation going nowhere fast, the weaker reading on producer prices earlier in the week suggests that consumer prices should remain contained in the near term."
However, ANZ senior economist Riki Polygenis said she remains concerned about the medium-term outlook for inflation.
While the Reserve Bank is likely to look through a forecast temporary spike in the next few quarters stemming from higher fruit and vegetable prices, she said underlying inflation is expected to pick up rapidly in the second half of 2011.
In a note, Polygenis said the reconstruction following the Victorian and Queensland floods will coincide with an upswing in mining investment and put an additional strain on resources from mid-2011 onwards.
"In addition, greater demand for skilled workers at a time of reduced migration is also expected to push the unemployment rate back below 5 per cent and put upward pressure on wages," she said.
"We also note that this is occuring at a time of higher global agricultural price inflation as well as higher crude oil prices, both of which will ultimately feed through to domestic inflation.
"As a result of these influences, ANZ is now forecasting the underlying CPI to head towards the upper end of the target band by the end of this year and to rise above 3 per cent in 2012."
Source: Morningstar.com
Australia's consumer price index (CPI) rose 0.4 per cent in the December quarter 2010, following a rise of 0.7 per cent in the September quarter, the Australian Bureau of Statistics (ABS) said.
The figure was below economists' expectations, which ranged from 0.6 per cent to 0.9 per cent.
The most significant price rises were for fruit, vegetables, domestic holiday travel and accommodation, and automotive fuel, the ABS said.
Offsetting this were price falls in pharmaceuticals, deposit and loan facilities, motor vehicles, audio-visual and computing equipment, and motor vehicle repairs, it said.
The CPI rose 2.7 per cent for the year to December quarter 2010, compared with a rise of 2.8 per cent through the year to September quarter 2010, the ABS said.
According to CommSec economist Savanth Sebastian, the inflation reading all but ensures that interest rates will remain on hold next week.
"And given that interest rate settings are already restrictive, it is looking likely that the next rate hike will not take place until well into the June quarter - especially given that there are parts of the economy like construction, manufacturing and the services sector going backwards," he said in a note.
"There is no question that inflationary pressures remain the hot button issue for the Reserve Bank.
"But not only is inflation going nowhere fast, the weaker reading on producer prices earlier in the week suggests that consumer prices should remain contained in the near term."
However, ANZ senior economist Riki Polygenis said she remains concerned about the medium-term outlook for inflation.
While the Reserve Bank is likely to look through a forecast temporary spike in the next few quarters stemming from higher fruit and vegetable prices, she said underlying inflation is expected to pick up rapidly in the second half of 2011.
In a note, Polygenis said the reconstruction following the Victorian and Queensland floods will coincide with an upswing in mining investment and put an additional strain on resources from mid-2011 onwards.
"In addition, greater demand for skilled workers at a time of reduced migration is also expected to push the unemployment rate back below 5 per cent and put upward pressure on wages," she said.
"We also note that this is occuring at a time of higher global agricultural price inflation as well as higher crude oil prices, both of which will ultimately feed through to domestic inflation.
"As a result of these influences, ANZ is now forecasting the underlying CPI to head towards the upper end of the target band by the end of this year and to rise above 3 per cent in 2012."
Source: Morningstar.com
Wednesday, January 26, 2011
Global recovery gaining
THE global economic recovery is gaining traction but is "still at risk" because of eurozone debt worries and a lack of financial reform, the International Monetary Fund said overnight.
The Washington-based institution said a two-speed recovery - with advanced economies growing at a significantly slower pace than emerging economies - was shifting gears as tax cuts in the US boosted consumption.
The IMF projected the global economy's output would expand by 4.4 per cent in 2011, slightly higher than the 4.2 per cent annual rate it forecast in October.
Its latest updates, released in Johannesburg, highlighted an improving but mixed global economic picture.
"In advanced economies, activity has moderated less than expected but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks," the IMF said.
The Washington-based institution said a two-speed recovery - with advanced economies growing at a significantly slower pace than emerging economies - was shifting gears as tax cuts in the US boosted consumption.
The IMF projected the global economy's output would expand by 4.4 per cent in 2011, slightly higher than the 4.2 per cent annual rate it forecast in October.
Its latest updates, released in Johannesburg, highlighted an improving but mixed global economic picture.
"In advanced economies, activity has moderated less than expected but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks," the IMF said.
"This reflects stronger-than-expected activity in the second half of 2010 as well as new policy initiatives in the United States that will boost activity this year," it added.
The global annual pace of growth, however, would still be slower than the 5 per cent seen in 2010. The banking sector remains volatile, Jose Vinals, the IMF's director of monetary and capital markets, told reporters in Johannesburg.
"More than two years after the onset of the financial crisis, global financial stability is still not assured. It is still at risk," he said.
"Banks face significant funding needs now and over the next two years. In many advanced economies, we need to deal with the legacy of the crisis by resolving financial fragilities once and for all," he added.
The IMF said a new US fiscal package passed in late 2010 was expected to boost growth in the world's biggest economy by 0.5 per cent.
The US economy had the sharpest markup by far: a 0.7 point gain to GDP growth of 3 per cent in 2011.
However, Olivier Blanchard, the IMF's director for research, said joblessness would continue to blight America.
"We have a long way to go ... we have to accept the fact that there is going to be an unemployment problem for a long time," he told AFP, also urging China to heed Washington's call to speed up the yuan's appreciation.
"It would be a good thing for China and for the rest of the world," he said.
There was no change in the 1.5 per cent growth forecast for the 17-nation eurozone or for Japan, where 1.6 per cent growth is predicted.
Growth in emerging economies remained "buoyant" but inflation pressures persist and there are signs of overheating in part from capital inflows as investors chase higher yields.
Growth in the top two Asian nations, China and India, was unrevised at 9.6 per cent and 8.4 per cent, respectively.
Sub-Saharan Africa is predicted to produce the strongest growth of any region, at 5.8 per cent.
Policymakers in the emerging economies, which account for more than two-thirds of global growth, should take steps to keep overheating pressures in check, the 187-nation institution said.
The IMF also warned of risks from the financial and debt crises in eurozone countries such as Greece and Ireland, amid tepid progress in financial reforms.
"The most urgent requirements for robust recovery are comprehensive and rapid actions to overcome sovereign and financial troubles in the euro area and policies to redress fiscal imbalances and to repair and reform financial systems in advanced economies more generally," it said.
There is also a need to step-up eurozone financial support for member countries in need, and to ensure better stress tests on banks, the IMF said.
"Markets remain skittish about potential losses in the region's banks and have not been assuaged by stress tests conducted to date."
The IMF forecast commodity prices would remain high in 2011 in response to strong global demand and it hiked its oil price per barrel estimate to nearly $US90 ($90.34), from the October figure of $US79, citing robust demand.
The global annual pace of growth, however, would still be slower than the 5 per cent seen in 2010. The banking sector remains volatile, Jose Vinals, the IMF's director of monetary and capital markets, told reporters in Johannesburg.
"More than two years after the onset of the financial crisis, global financial stability is still not assured. It is still at risk," he said.
"Banks face significant funding needs now and over the next two years. In many advanced economies, we need to deal with the legacy of the crisis by resolving financial fragilities once and for all," he added.
The IMF said a new US fiscal package passed in late 2010 was expected to boost growth in the world's biggest economy by 0.5 per cent.
The US economy had the sharpest markup by far: a 0.7 point gain to GDP growth of 3 per cent in 2011.
However, Olivier Blanchard, the IMF's director for research, said joblessness would continue to blight America.
"We have a long way to go ... we have to accept the fact that there is going to be an unemployment problem for a long time," he told AFP, also urging China to heed Washington's call to speed up the yuan's appreciation.
"It would be a good thing for China and for the rest of the world," he said.
There was no change in the 1.5 per cent growth forecast for the 17-nation eurozone or for Japan, where 1.6 per cent growth is predicted.
Growth in emerging economies remained "buoyant" but inflation pressures persist and there are signs of overheating in part from capital inflows as investors chase higher yields.
Growth in the top two Asian nations, China and India, was unrevised at 9.6 per cent and 8.4 per cent, respectively.
Sub-Saharan Africa is predicted to produce the strongest growth of any region, at 5.8 per cent.
Policymakers in the emerging economies, which account for more than two-thirds of global growth, should take steps to keep overheating pressures in check, the 187-nation institution said.
The IMF also warned of risks from the financial and debt crises in eurozone countries such as Greece and Ireland, amid tepid progress in financial reforms.
"The most urgent requirements for robust recovery are comprehensive and rapid actions to overcome sovereign and financial troubles in the euro area and policies to redress fiscal imbalances and to repair and reform financial systems in advanced economies more generally," it said.
There is also a need to step-up eurozone financial support for member countries in need, and to ensure better stress tests on banks, the IMF said.
"Markets remain skittish about potential losses in the region's banks and have not been assuaged by stress tests conducted to date."
The IMF forecast commodity prices would remain high in 2011 in response to strong global demand and it hiked its oil price per barrel estimate to nearly $US90 ($90.34), from the October figure of $US79, citing robust demand.
Source: news.com.au
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