World Economy Set for Continued Growth in 2007

18 January 2007

WASHINGTON, DC: Rodrigo de Rato, managing director of the International Monetary Fund, was in bull mode at the IMF annual press conference on Tuesday, predicting the world economy will remain robust through 2007, with the USA set for a "soft landing" and China's expansion continuing apace.

Declared de Rato: "After four consecutive years of strong growth, what we expect is that global growth will remain solid in 2007, approaching 5%. This represents certainly a very significant expansion of the global economy and probably the longest (if not the longest, one of the longest) sustained periods of growth in the post-Bretton Woods era, that is, after the second World War.

"In that respect, while the US economy has slowed down in large part because of the continued weaker housing market, what I can say now is that a soft landing seems more sure as lower energy prices have supported employment growth and consumption. Also, we see the decrease in the housing market to be bottoming out.

"At the same time, and this is an important issue that makes comparison with 2000 different, spill-over to other economies from a slower US growth have been minimal. Economic recovery in Europe has broadened at the same time as we were seeing the US slow down, and growth in Japan is broadly on track after an earlier soft patch."

Meantime, said the IMF honch, China is set for another year of growth beyond the 10% mark, albeit urging the People's Paradise to curtail unproductive investment.

De Rato believes that falling energy prices will support the global economy, "although we might see volatility in oil prices down the road."

His Panglossian optimism is not shared by all economic observers, one of whom cites Julius Caesar: "Men are nearly always willing to believe what they wish."

Data sourced from; additional content by WARC staff