IMF says global economy slowly improving (by Greg Robb)

WASHINGTON (MarketWatch) - The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2012 and 2013, citing improved financial conditions and unwinding of the financial crisis, but warned that the recovery is still fragile. In an update of its world economic outlook, the Washington-based institution said it expects global output to grow by 3.5% in 2012, up from a January forecast of 3.3%. Global output is expected to expand 4.1% in 2013, up from the previous forecast of 3.9%. The global economy grew at a 3.9% pace in 2011. Spain was the only major country that had its 2012 growth outlook cut by the IMF, to a decline of 1.8% from the previous forecast of a 1.6% drop. The Bank of Spain said earlier Tuesday that the Spanish economy is back in recession after a mild recovery in early and mid-2011. The European Central bank has some room to further lower interest rates as inflation is expected to fall below the central bank's 2% inflation target, the IMF said. Asia looks headed to a soft landing, the report said.