The International Monetary Fund says the global economy is recovering but faces risks particularly from high oil prices and unemployment. In its half yearly report, the IMF said developing countries are leading the recovery but inflation remains a big threat.

It says the United States urgently needs to tackle its budget deficit to help avoid instability in financial markets. The report said among the challenges are rising oil prices, unrest in West Asia, continued inflation in China and debt problems in Europe.

The IMF estimates the global economy to grow by 4.4 percent during the current year.