Global: IMF Downs 2003 Growth Forecasts Except for Japan

26 September 2002

The Washington-headquartered International Monetary Fund unveiled Wednesday its latest six-monthly World Economic Outlook, revealing mixed but generally favorable prospects for the world at large.

Despite a mass of revisions – up and down – from its last report, the study predicts a global average economic expansion of 2.8% in 2002 and 3.7% in 2003.

In an overall snapshot, the report concluded that:

• The recovery in the US is now expected to be considerably weaker than earlier thought.

• The outlook for major developing nations has become increasingly diverse - especially in Latin America.

• African economic growth has held up surprisingly well, supported by improved economic policies and fewer conflicts, among other things.

The IMF is less optimistic about global GDP prospects for 2003 than it was six months ago, downgrading all its assessments save that for Japan. Says IMF director of economic research Kenneth Rogoff: “Although our baseline is still for a global recovery, it’s likely to be less strong than we earlier anticipated.”

In 2003, worldwide growth in GDP (gross domestic product: a measure of the total value of goods and services produced by an economy over a specified time period) is forecast to come in at 3.7% - thirty per cent lower than forecast in the spring.

Among the globe’s major economies, the IMF predicts the following rates of growth:

• USA: 2.6% (was 3.4%)

• Japan: 1.1% (was 0.8%)

• EU: 2.3% (was 2.9%)

• UK: 2.4% (was 2.8%)

Japan alone is expected by the IMF to do better than originally forecast, although Rogoff appeared guarded about the longer term: “Japan appears to be emerging from its third recession in a decade. However, there is no guarantee against another similarly bad decade absent [without] a determined effort to address the nation’s core economic problems.”

Rogoff also worried over the relative lack of growth within the European Union, opining that its member-states have potential for growth that could be unlocked. “Europe needs to decide whether it's going to be a locomotive in the world economy or a caboose [brake-van],” he said.

Publication of the IMF report coincides with the meeting of finance ministers of the main world economies this week in Washington.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff