labels: economy - general
China, India driving world economic growth, says IMF chiefnews
31 July 2007

Mumbai: China has overtaken the United States to become the biggest contributor to world economic growth even as the China and India have emerged the new engines of world economic growth, Rodrigo Rato, director of the International Monetary fund, said.

"For the first time, the largest contribution to global growth will now be made by China," Rato said at a business conference in the Philippines. "Looking ahead, we expect this pattern of growth to continue... We expect China - and increasingly India - to grow in importance as engines of global growth," he added.

He said China is expected to grow by over 11 per cent and India at around 9 per cent this year and the next while the US economy would "regain momentum gradually as the drag from the current housing correction and the softness in the business sector dissipates."

While the global economy had well absorbed the high oil prices driven by increased demand, he said "a supply shock could be much more damaging to global growth."

He, however, cautioned against inflows of capital to emerging economies that could complicate macro-economic management and expose the countries to volatility of capital flows.

Rato also warned of the "danger of a backlash against globalisation" as many people felt mainly benefited the wealthy and educated.

The outlook for the global economy is generally good and the economic prospects of most countries Europe, Japan and emerging Asia also remain good, he said.

The best way to address global growth with inequality was to increase investment in education and technology and give the poor more access to infrastructure, utilities and financial services so they could also benefit from globalisation, Rato said.

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China, India driving world economic growth, says IMF chief