The fact that a positive IMF report that placed Malta in the third place for growth among the EU councils was being irresponsibly given a negative spin by the Labour Party was pure sour grapes, Finance Minister Tonio Fenech said this afternoon.

Mr Fenech was reaction to the Labour Party, which, this afternoon said that the fact that the IMF was projecting an economic growth rate of 1.2% for Malta this year showed that it too did not believe the government's dudget projection of 2.3% growth.

Reacting to the IMF Global Outlook, issued last night, the PL noted that it had immediately declared after the Budget speech that the government's projections were not realistic. The European Commission too had not believed the government's figures.

Because of its wrong estimates, the government was eventually forced to cut back its spending by €40m, the PL said.

Matters would have been much better for the country and Maltese families had the government been honest with itself and presented a realistic picture.

The PL also noted that the IMF was projecting unemployment of 6.6% in Malta. According to Eurostat, in January-February, unemployment already stood at 6.8%.

The minister downplayed the IMF's downward projection of employment and said that government income was in line with projections.

He said that the difference in economic growth forecast between the IMF and government projections was of 0.8 per cent. This was not a big difference since economic grwoth forecast wasnot an exact science and often relied on a number of assumptions which explained the difference between the two.

He challenged Labour leader Joseph Muscat to explain how he would balance the books while lowering tariffs with cutting on expenditure. Dr Muscat, Mr Fenech said, seemed determined to discourage investment.

In data given with its report, the IMF said that Malta's GDP was expected to grow at the third fastest rate in the euro area this year.

The report projects a growth rate of 1.2% this year. The best performers are projected to be the Slovak Republic at 2.4% and Estonia at 2.0%. Still, Malta's GDP growth would be slower than the 2.1% of last year.

Malta's economy is projected to grow by 2% next year.

According to the report, consumer prices are this year expected to decelerate to 2.0% from 2.4%, falling to 1.9% next year while unemployment will rise this year to 6.6 (see table above).

Annual percent change of real GDP and total domestic demand is projected to climb to 3.1% in the fourth quarter of this year, the best in the eurozone.

The International Monetary Fund in its report raised its global growth forecasts slightly for this year and 2013, but warned that Europe's debt crisis and high oil prices could derail recovery.

The IMF estimated global growth at an annual rate of 3.5 percent this year, accelerating to 4.1 percent in 2013.

The forecasts reflected an upgrade from the January forecast of 3.3 percent and 4.0 percent, respectively.

"The outlook for the global economy is slowly improving again but is still very fragile," the IMF said in a twice-yearly report.

China continued to be the global driver. The world's second-largest economy was forecast to grow at 8.2 percent, picking up to a robust 8.8 percent in 2013.

Despite the blow to its export industries due to "spillovers from Europe", China's economy would post strong growth thanks to "robust" domestic consumption and investment.

The improved forecast arose in part from better global financial conditions and easing fears about the eurozone debt crisis.

Reconstruction in Japan and Thailand, following natural disasters, also helped to foster growth in Asia.

"Policy has played an important role in recent improvements, but various fundamental problems remain unresolved," said the IMF, considered the global lender of last resort for troubled member countries.

The fund cited the European Central Bank's pumping cash into the eurozone banking system, the expansion of a eurozone firewall to contain the debt crisis and structural reforms aimed at restoring financial health.

In the United States, an extension of payroll tax relief and unemployment benefits averted excessive fiscal tightening that would have damaged the US economy.

Growth in the US, the largest economy, was now seen at 2.1 percent this year and 2.4 percent the following year, up from the prior estimates of 1.8 percent and 2.2 percent, respectively.

"The main concern is that the global economy will continue to be susceptible to major downside risks... and that the recovery will remain anemic in the major advanced economies," the IMF said in its World Economic Outlook report.

"These challenges call for more policy action, especially in advanced economies," and include "resolving the euro area crisis without delay."

"The first priority for US authorities is to agree on and commit to a credible fiscal policy agenda that places debt on a sustainable track over the medium term," the IMF said in a warning to bickering policymakers.

The report comes ahead of the IMF's spring meetings with its sister institution, the World Bank, that open this week in Washington.

The IMF raised its growth estimate for the advanced economies to 1.4 percent for 2012, including a contraction of 0.3 percent in the 17-nation eurozone.

Growth would pick up to 2.0 percent in 2013, when the single-currency bloc was expected to post a 0.9 percent recovery rate.

"The WEO projections assume that policymakers will prevent a Greek-style downward spiral from taking hold of another economy on the euro area periphery," the IMF said.

The outlook sees financial stress remaining volatile and falling "only gradually."

Eurozone government and banks face daunting refinancing needs of about 23 percent of gross domestic product in this year alone. Banks trying to reduce debt will trim an estimated $2.6 trillion from balance sheets over the next two years.

"Although these pressures are likely to affect mainly economies in the euro area periphery and in emerging Europe, they will be a drag on growth in core economies that could worsen if funding conditions deteriorate."

However, "if disruptions in the euro area worsen, access to funding is very likely to tighten everywhere," the IMF warned.

Rising oil prices could also wreak havoc, particularly if geopolitical tensions over Iran's disputed nuclear program cuts global supply.

A halt of Iran's exports to the OECD advanced economies, if not offset by other supplies, could push prices up about 20 to 30 percent, the IMF projected.

An oil price shock could reverberate through the global economy, causing a 1930s-magnitude slump, the IMF said.