IMF Announces Increased Global Economic Growth
By Stewart Douglas
July 26, 2007
The International Monetary Fund’s (IMF) forecast for the growth of the global economy for the year has been raised.
The IMF predicted a 4.9% global growth rate in April but has now revised this figure to 5.2% for both this year and the year to follow, based on the impact of several rapidly expanding economies worldwide.
Central to the increased prediction is the accelerating growth seen in the Chinese, Indian, and Russian economies, which together represent over one half of the 5.2% global economic growth projected for this year.
China alone has seen its growth forecast increase from 10% to 11.2%, making it the biggest factor in global economic growth, for the first time. The Eurozone area’s growth estimate has increased from 2.3% to 2.6%.
The IMF also speculates that the U.S. economy may be recovering soon from the slow growth it has experienced recently. While it has suffered from a slow economy in the first three months of this year, the 2008 prediction for the U.S. of 2.8% growth has remained unchanged.
However, this year’s U.S. forecast has decreased from 2.2% to 2.0%, showing a slowing in the forthcoming months before the predicted turnaround next year.
The projected growth could come with added troubles, however. Amid the positive forecast were also concerns from the IMF over mounting inflationary pressures.
Inflation worries stem in part from the rising energy prices and less stability in the financial markets.
The number of defaults in the sub-prime mortgage market has contributed to greater risks in financial markets, and much of the US economic growth difficulties of late.
Their “World Economic Factbook” has been updated with a new forecast that expects central banks to be more likely to raise interest rates since the last report in April.
They say that inflation remains “generally well contained” for the present time, but there is an “increasing likelihood central banks will need to further tighten monetary policy”.