The world economy will continue to grow at a quick pace, the International Monetary Fund said in Washington Wednesday, as it revised growth projections upward for 2007.
Global economic growth is projected to be 5.2% this year and next, an increase in the organization's prediction of 4.9% in an April report. The revision to the twice-yearly world economic outlook comes as emerging and developing countries led by China, India and Russia saw substantial upward revisions, the IMF said.
Growth figures for China were revised upward by 1.2 percentage points to 11.2% for 2007; Indian growth forecasts were up 0.6 percentage points to 9%; and Russian growth was expected at 7% in 2007, up 0.6 percentage points. Growth figures for the United States, however, were revised downward by 0.2 percentage points since the April report. The world's largest economy can now expect 2% growth, but “should regain momentum through the year and return to potential by mid-2008,” the report said.
The euro area saw growth forecasts revised upward by 0.3 points to 2.6%.
Global growth was 5.4% in 2006.
The IMF continued to cite rising oil prices, protectionist pressures, deteriorating credit quality and inflation as concerns. “Inflation risks have edged up since the April 2007 World Economic Outlook, increasing the likelihood that central banks will need to further tighten monetary policy,” the IMF said. It also said risks related to a slump in the US housing market have lessened. However, risks related to weakening of credit and defaults on sub-prime mortgages will continue to hurt financial markets, the IMF said. (monstersandcritics.com)