Robust growth ahead: IMF
World economy seen growing 4.2% in 2001;
U.S. tipped for soft landing
September 19, 2000: 6:14 a.m. ET
LONDON (CNNfn) - The world's developed economies are poised for strong growth and little
inflation through 2001 as growth in Asia and Latin America continues at a robust pace and the
U.S. economy experiences a moderate slowdown, the International Monetary Fund forecast
Tuesday.
However, historically high oil prices could act to slow economies down, the agency said,
warning it might trim its forecasts if the cost of fuel stays at current levels or higher.
In its semi-annual World Economic Outlook, the Washington-based IMF said the world economy
should grow by 4.2 percent in 2001, an increase from its April estimate of 3.9 percent though a
little slower than the 4.7 percent expansion it expects for the whole of this year.
Michael Mussa, the IMF's economic counselor and director of research, told reporters in a
press conference at the IMF-World Bank meetings in Prague that the world economy is
enjoying its strongest period of growth in more than a decade, despite global oil prices that
remain obstinately near 10-year highs.
Indeed, Mussa cautioned that unless oil prices fall, the agency might lower its forecasts as
much as 0.5 percent from current levels. Rising oil prices tend to slow economic growth by
raising the cost of everything from manufacturing tires to heating a home.
Brent crude for November delivery recently traded at $34.35, down 11 cents from Monday.
"The U.S. economy is maintaining its momentum, the recovery in European nations is picking up,
the Japanese economy is showing signs of recovery and Asian economies are in solid
recovery," the report said. Mussa added to that view, noting that he expects to see an
"extremely soft landing" for the U.S. economy.
The IMF raised its forecast for U.S. economic growth in 2001 to 3.2 percent from 3 percent in
its April report. It said the U.S. economy will likely grow 5.2 percent this year, up from its
previous forecast of 4.4 percent in April. The economy expanded 4.2 percent in 1999.
For the euro region, the IMF forecast that the economy would grow 3.5 percent in 2000, up
from its initial estimate of 3.2 percent made in April. For 2001, euro region growth was
estimated at 3.4 percent versus the April forecast of 3.2 percent.
The German economy was expected to grow by 2.9 percent this year, up slightly from a
forecast of 2.8 percent in April, while the projection for growth in 2001 was unchanged at 3.3
percent. The IMF forecast for 2000 French economic growth was unchanged from April at 3.5
percent. But its estimate for 2001 was raised to 3.5 percent from 3.1 percent.
Japan's economy was forecast to grow by 1.4 percent this year, up from the April estimate of
0.9 percent. The 2001 growth forecast was unchanged at 1.8 percent. |
