The world economy is on the brink of an “imbalanced recovery”, according to the latest set of forecasts from the International Monetary Fund.
The World Economic Outlook report – drawn up ahead of the IMF’s meeting with the World Bank – is maintaining its global economic growth predictions of 3.2% this year and 4.1% next, pointing to stronger equity markets, the end of the war in Iraq and growing consumer confidence as positive signs.
“There is now good cause to be reasonably optimistic that the global economy is finally digging its way out of a very deep hole,” declared IMF chief economist Kenneth Rogoff.
However, growth will be far from even around the world. The US, said Rogoff, is experiencing “the best recovery that money can buy.” America’s economic growth is now forecast at 2.6% in 2003 and 3.9% in 2004, up from 2.2% and 3.6% (respectively) in the IMF’s last set of predictions in April.
In contrast, estimates for the Eurozone have been slashed. Growth in the twelve-nation area is forecast at 0.5% this year and 1.9% next, down from 1.1% and 2.3% in April.
Similarly, the UK prediction is now 1.7% for 2003 (down from 2%), then 2.4% in 2004 (down from 2.5%).
Elsewhere, Asian economies are expected to post the strongest growth, with expansion across the continent forecast at 6.4% this year and 6.5% next. China’s economy will lead the way with 7.5% rises in both years, while Japanese growth will slow from 2% in 2003 to 1.4% in 2004.
Despite the best global outlook since 2001, Rogoff cautioned against complacency. He called the recent collapse of the Cancun trade talks a “tragedy”, predicting that it could eventually hinder worldwide growth and increase poverty.
There was also a word of warning for the US, whose traditionally strong role in the global economy may be compromised by record imbalances in trade and a rising budget deficit.
Data sourced from: multiple sources; additional content by WARC staff