Just a last post before getting to bed..Global economy, with this kind of economy we will see some good markets globally..
IMF Sees Faster Growth in 1999, 2000 as Asia Rebounds (Correct)
(Corrects to show forecast for Brazil is an improvement.)
Washington, Sept. 7 (Bloomberg) -- The International
Monetary Fund sees the global economy growing faster in 1999 and
2000 than expected earlier this year, largely driven by a rebound
in Asia, according to a draft of the IMF's World EconomicOutlook.
The ''prospects for economic growth in the world have
improved considerably,'' the IMF said, revising its 1999 growth
forecast to 2.8 percent from its May estimate of 2.3 percent,
according to a summary of the preliminary report, posted in Dutch
on the Netherlands' Finance Ministry's web site. For 2000, growth
should reach 3.4 percent, up from 3.3 percent in May, it said.
The document credits faster-than-expected recoveries in the
Asian nations hit by recession in 1997 and 1998, and it said
''the recessions in Russia and Brazil are less deep than was
initially expected.'' In addition, ''growth in Japan and Europe
seems to be picking up.''
The revised outlook suggests the worst of the global
financial crisis -- which began in Thailand, Indonesia and South
Korea in 1997, spread to Russia and Eastern Europe, then to Latin
America last year -- has abated.
The report warned, however, the biggest threat to the global
expansion is the increasing U.S. trade deficit, which it said
could slow growth in the world's largest economy.
IMF officials in Washington said the document is not the
actual World Economic Outlook, scheduled to be released on Sept.
22 in conjunction with the IMF's annual meeting. The fund said it
is continually updating the outlook.
A Dutch finance ministry spokesman described the document as
a ''preliminary'' copy provided to the ministry by the IMF and
posted on the website as part of a transmission to the Dutch
parliament. ''The figures are preliminary; the IMF holds the
right to change those figures, '' said Frits Kemperman, a
spokesman for the ministry. U.S. Growth
The U.S. is expected to grow at a 3.7 percent pace this
year, according to the summary, up from the IMF's initial
estimate of 3.0 percent in May. Growth next year should be 2.6
percent, revised up from the May estimate of 2.2 percent.
Yet the report said the U.S. trade gap was a growing
problem. ''The way in which the balance... is improved will
determine in an important way if the current posted economic
developments will continue,'' the summary said.
According to the document, the IMF said the Federal Reserve
may have to raise interest rates ''temporarily'' to cool
Americans' demand for imported goods.
''Imbalances, especially the highly valued stock market, the
negative private savings rate, the dependence on foreign savings
and the high valuation of the dollar could be the cause of a
'hard landing','' the summary said. Higher U.S. interest rates
could ''limit the risks and to prevent overheating,'' it said,
even though the summary notes that ''expansion in the U.S.
continues almost without price or wage pressure.''
Inflation in the U.S. this year is forecast to be 2.2
percent, and 2.5 percent in 2000. Japan's 'Limited Revival'
According to the summary, ''various signals point to a
(limited) revival'' in the Japanese economy. Japan is expected to
eke out growth of 0.2 percent in 1999, up from a May forecast of
a 1.1 percent contraction. In 2000, the Japanese economy should
grow 1 percent, the document said, up from the previous estimate
of 0.3 percent growth.
Japan should experience deflation in 1999, with overall
prices falling 0.2 percent. Prices will rise 0.1 percent in 2000,
the document said.
Japanese policy-makers have to deal with ''contradictory''
goals. The country's budget deficit, now almost 10 percent of
GDP, must be cut to finance social security programs for Japan's
aging society. Yet now is not an ''opportune'' time to do so ''in
light of the temporary need for continuing demand stimulation,''
the document said.
The Japanese have created ''a good framework'' for reform of
the economy, and must ''emphasize'' continued restructuring.''
The IMF ''sees some room'' for the Bank of Japan ''to provide the
economy with liquidity,'' according to the summary document.
EU Risks Diminished
The document said European Union growth forecasts are
unchanged from the previous outlook -- 1.9 percent in 1999 and
2.7 percent in 2000 -- although ''it must be noted that the
downward risks have diminished.''
Monetary policy in the single-currency euro zone is
''largely fit for the current situation'' the summary said, and
the IMF ''doesn't deem it probable that changes of the official
rate in the course of this year will be necessary.''
However, if it becomes clear that the economic revival in
Europe ''remains below expectations,'' the IMF sees ''room'' for
the European Central Bank to lower rates.
The IMF summary criticizes European governments for
''insufficiently ambitious'' efforts to reduce spending. ''To cut
back the structural deficits and to lower tax pressures, cutbacks
in expenditures are necessary, especially expenditures on
subsidies, pensions and social security,'' the summary said.
Russia Improved
The outlook in Russia has improved, with the economy
expected to contract 2 percent, up from a projected contraction
of 7 percent in May. There is no forecast in the preliminary WEO
for Russian growth in 2000.
China is projected to grow 6.6 percent in 1999, unchanged
from the May estimate, but below the Chinese stated goal of 8
percent growth. In 2000, the IMF document says China will grow 6
percent, down from a projection of 7 percent growth in the MayWEO.
Brazil should see its economy contract 1 percent this year
before expanding 4 percent in 2000, the report said. That's
better than the 3.7 percent contraction in 1999 forecast in May,
and better than the 3.7 percent growth initially projected fornext year.
Argentina will see its economy contract 3 percent this year,
compared with the flat growth forecast in May. Argentina will
grow 1.5 percent in 2000, slower than the 3 percent expansion the
IMF forecast in May, the document said. |
