IMF cautiously upbeat on global economy
( 2003-09-20 10:12) (Xinhua)
With increasing signs of a renewed recovery and the balance of risks improving, the International Monetary Fund (IMF) on Thursday cautiously predicted global economy will grow at 4.1 per cent in 2004, up from 3.2 per cent this year, the same forecast as it made in April.
At a press conference here on releasing the IMF World Economic Outlook report, Kenneth Rogoff, economic counsellor and director of the IMF Research Department, said the IMF is reasonably optimistic about seeing a return to normal growth in the global economy.
"Immediate geopolitical uncertainties have receded (some what), aftershocks from the equity price bubble are dissipating and the massive policy stimulus put in place after the downturn is starting to bear full fruit,'' Rogoff said.
"But it is certainly no time for complacency. The recent collapse of trade negotiations in Cancun is a tragedy, not least because without strong trade growth, global growth will eventually slow significantly, and global poverty will rise, '' he told the press conference.
Rogoff also said there are still many risks for global economy, citing the disturbing pattern of global current account imbalances, which is likely to get worse before it gets better, with the United States continuing to absorb a huge share of world net savings, and Asian economies providing much of it.
"Another cloud on the horizon is the high and growing level of the public indebtedness throughout the world,'' he warned.
In its World Economic Outlook report, the IMF predicted the advanced economies will achieve a growth rate of 1.8 per cent this year and 2.9 per cent in 2004. Among them, the United States is projected to grow at 2.6 per cent this year and 3.9 per cent next year.
The United States "continues to project a renewed recovery in the second half of 2003 and 2004, at a somewhat stronger pace than earlier expected,'' the report said. But it warned that the US economy faces risks from its huge government deficit and a possible collapse in house prices.
Japan's economy is expected to rise to 2 per cent this year from 0.2 per cent last year, but the growth will fall back to 1.4 per cent in 2004.
The euro zone's projected growth rate will be 0.5 per cent this year and 1.9 per cent next year, the report said, adding that Britain's gross domestic product (GDP) growth rate will rise from 1.7 per cent this year to 2.4 per cent in 2004.
For the developing countries, the economic growth rate will be 5.0 per cent this year and 5.6 per cent next year.
Asia is again set to be the world's fastest growing region this year and growth is expected to pick up further in 2004, with a projected growth rate of 6.4 per cent this year and 6.5 per cent next year. China's GDP growth rate will be 7.5 per cent both in 2003 and 2004.
"China and India's strong growth portends an inevitable changing of the guard in Asia. We project China's growth at 7.5 per cent for both 2003 and 2004, and it could easily do even better,'' Rogoff said.
In Latin America, a tentative recovery appears emerging on the back of export growth, as domestic demand remains weak. The projected growth rate in Latin America will rise from 1.1 per cent this year to 3.6 per cent next year.
Growth in Africa would "pick up significantly in 2004 with a 4.8 per cent growth rate after the 3.7 per cent increase this year, the report said, adding that Africa's prospects depends on better weather and fewer wars.
"Such an out-turn, however, depends critically on more favorable weather conditions and a substantial reduction in the incidence of conflict and unrest,'' the IMF report said.
It said the Middle East countries must work hard to increase jobs, especially as oil analysts expect the price of crude oil to weaken and hurt growth.
The projected growth rate of countries in transition will be 4.9 per cent this year and 4.7 per cent in 2004, with Russia's growth rate being 6 per cent and 5 per cent respectively in 2003 and 2004.
The IMF also predicted that the world trade volume (goods and services) will grow at 2.9 per cent in 2003 and 5.5 per cent in 2004.
The IMF report was released ahead of the World Bank and IMF annual meetings, which will be held in Dubai, the United Arab Emirates.
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