I.M.F. Warns Global Economy Could Slow This Year and Next
April 21, 1999
By PAUL LEWIS
WASHINGTON -- The International Monetary Fund warned Tuesday that global economic growth could slow in 1999 and perhaps into 2000, hurt by weakness in Russia, Asia, Brazil and some regions of Europe, notably those ravaged by the Kosovo conflict.
The group's latest world economic outlook said that "several hurdles could prevent global growth from returning to potential within two or three years."
The lending agency's assessment was issued at the beginning of a weeklong meeting in Washington by officials of the I.M.F. and the World Bank. Its cautious tone followed the I.M.F.'s conspicuous failure to foresee the 1997 economic crash in Southeast Asia and its havoc on financial markets around the world, the subsequent financial crisis in Russia and parts of Eastern Europe or the more recent economic tremors in Brazil, Latin America's largest economy.
C. Fred Bergsten, who runs the Institute for International Economics here, said the I.M.F. caution also reflected its desire to fight complacency that could come in weakened economies if they show signs of improvement.
"The fund is afraid that if recovery starts, the countries of Asia, Latin America and Eastern Europe will back off from the deep structural economic reforms the recent crises showed they must make," he said.
The I.M.F. predicted a 2.3 percent global economic growth rate this year, down from 2.5 percent in 1998 and 4.2 percent in 1997.
It predicted a 3.4 percent growth rate in 2000. That projection assumed a steady improvement in the emerging-market economies, a gradual slowing of the American economy to a more sustainable pace, resilience in Europe and an end to the Japanese recession. But the I.M.F. said the weakness this year in Brazil, China and Russia, as well as the possibility that Japan's recession could worsen, could lead to "a distinct possibility of a less favorable scenario developing."
It also said economic activity in the former Communist countries of southeastern Europe would be affected by the Kosovo crisis. |
