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Asia, US to buoy global growth, says
IMF
By Emad Mekay
WASHINGTON
- The world economy will rebound in 2004 and 2005,
buoyed by an increase in global trade and surging
economies in Asia and the United States, but growth in
developing nations will ease slightly, the International
Monetary Fund (IMF) said on Wednesday.
In its
high-profile World Economic Outlook, published twice a
year, the international lender predicted that global
growth will hit 4.6 percent in 2004 and fall slightly to
4.4 percent next year.
The US and Asia,
particularly China, led growth over the past year, says
the IMF. Asia is expected to improve to 7.2 percent
growth in 2004, its highest level since before its 1997
financial crisis, thanks in particular to recovery of
the information-technology sector. China's economy will
expand by 8.5 percent next year, with India growing 6.8
percent this year and 7.4 percent in 2005.
Developing-country economies, which grew by 6.1
percent in 2003, will increase by 6 percent this year
and by 5.9 percent in 2005.
"The tentative buds
of the recovery we observed six months ago are now
blooming in many parts of the world," Raghuram Rajan,
chief economist at the Washington-based institution,
told reporters.
But the IMF warned that the
positive assessment is still fraught with "geopolitical
risks", including possible terrorist attacks, tensions
in the Middle East and US-occupied Iraq, and fluctuating
oil prices.
The agency calculates that for every
US$5-a-barrel rise in the cost of oil above the baseline
price - if it remains in place for one year - global
growth declines by some 0.3 percent. Oil prices have
jumped from $26.50 a barrel in September to $34 a barrel
in mid-April.
"It is worrisome that supply
conditions are not slack enough to withstand the
withdrawal of a significant producer," Rajan said.
The IMF also warned that the current fiscal
deficit in the United States, combined with similarly
serious deficits in Asia, remains a threat to global
recovery. "On the fiscal side, the United States is not
the only economy that needs to consolidate, but it is
the most important," said Rajan.
Growth in Latin
America, especially Brazil, remains weak, but higher
commodity prices and the global recovery will help turn
that around, according to the IMF, which will hold its
spring meetings in Washington this weekend, in
conjunction with the World Bank.
The Middle East
will see slightly higher growth this year, at about 4.1
percent, versus 5 percent in 2005, while the former
Soviet republics will grow 6 percent in 2004,
underpinned by robust upturns in Russia and Ukraine.
Among the world's poorest countries, growth in
2003 rose by 4.4 percent, lifted by the surge in oil
production and oil prices in Nigeria. It should increase
another 5.9 percent in 2005, on the back of better
weather conditions, improving commodity prices and
increasing oil and gas production in many African
countries, predicts the outlook.
US growth is
projected at 4.6 percent in 2004, while the Japanese
economy is expected to grow by 3.4 percent, its highest
rate since 1996. Europe, which has seen the slowest pace
of recovery because consumption remains weak, will grow
a modest 1.7 percent, according to the IMF.
As
the IMF forecast was released on Wednesday, a couple of
hundred protesters demonstrated outside its headquarters
in Washington. Critics say the fund and the World Bank
exacerbate global poverty by pushing policies that favor
corporations in rich nations and pry open the fragile
markets of developing states.
The forecast is
packed with the usual advice for poor nations. It urges
them to open their borders to more trade and to continue
overhauling their banking and corporate sectors.
The annual outlook has been criticized for
gauging the health of the world economy from the
perspectives of nations that dominate the IMF's
executive board - northern countries - and for making no
provision for human development.
In 2003,
economists and activists from the so-called global
justice movement that opposes corporate-led
globalization issued their first "Real World Economic
Outlook". Published by Jubilee Research at the
London-based New Economics Foundation, the report
presented an alternative view to the one offered by the
IMF and other Western-backed custodians of the global
economic system.
The alternative outlook said
the "trickle down" effect promised by the IMF and World
Bank - a theory that says the benefits of economic
growth will flow from the richest to the poorest - has
not materialized. Instead, poor countries are lenders to
the rich - unwittingly financing opulent living
standards in the United States and elsewhere.
(Inter Press Service)
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