IMF Boosts Global Forecasts as US Recovers

19 April 2002

The global economy will enjoy 2.8% growth this year according to the International Monetary Fund, which has revised upwards its forecast of worldwide expansion in 2002 from the 2.4% predicted in December.

Although an improved forecast was anticipated (draft copies of the World Economic Outlook survey were leaked to the press last week), the new figure is slightly higher than the 2.7% recent reports expected [WAMN: 09-Apr-02].

The IMF has raised its projections thanks to improved conditions in the US economy, which the report attributes to swift action by the Federal Reserve to lower interest rates.

America is now expected to be in line for 2.3% growth this year (compared with December’s forecast of 0.7%), followed by 3.4% in 2003.

Europe, which experienced a milder slowdown last year than the US, will witness 1.5% expansion in 2002 and 2.9% the year after. Japan’s economy, however, will contract 1% this year then bounce back with 0.8% growth in 2003.

Despite the IMF’s increased optimism, others are more cautious regarding the pace of US recovery, underlined by the latest index of leading indicators from New York-based research group the Conference Board.

The index, which measures expected economic activity over the next six months, increased just 0.1% in March, below analysts’ expectations of 0.3%. Following a flat February reading, the results suggest the upturn will be slow, though an upturn nonetheless.

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