labels: economy - general, international monetary fund
IMF ups 2007-08 world economic growth forecast to 5.2 per centnews
26 July 2007

Mumbai: The International Monetary Fund (IMF) has raised its world economic growth forecast for 2007 and 2008 to 5.2 per cent, up 0.3 per cent from the 4.9 per cent growth forecast for both years in its World Economic Outlook (WEO), published in April.

The IMF hiked the growth forecast by 0.3 percentage points on the back of robust growth in emerging markets, with China poised to become its most powerful growth driver.

Under the revised estimates, China will see growth of 11.2 per cent in 2007, 1.2 percentage points higher than forecast in April. The IMF also revised India''s growth rate upward by 0.6 points to 9.0 per cent, and Russia''s to 7.0 per cent.

"The global economy continued to expand at a brisk pace in the first half of 2007," the IMF said in a statement.

"The major upward revisions have been for emerging market and developing countries, with growth projections substantially marked up for China, India and Russia."

IMF, however, lowered its 2007 forecast for the United States, the world''s biggest economy by 0.2 points to 2.0 per cent.

"Although growth in the United States slowed in the first quarter, recent indicators suggest that the economy regained momentum in the second quarter," the IMF said. It also predicted US economy''s "return to potential by mid-2008."

The US growth forecast for 2008 was left unchanged at a 2.8 per cent.

For Japan, the world''s second-biggest economy, the IMF raised its growth forecast to 2.6 per cent in 2007, up 0.3 percentage points, and to 2.0 in 2008, up 0.1 point.

In Europe, the IMF expects the 27-nation euro to expand at a faster rate of 2.6 per cent in 2007 and 2.5 per cent in 2008, up 0.3 points and 0.2 points, respectively.

The upward revision was based on a 2.6 per cent growth expected in Germany, Europe''s largest economy, in 2007 and by 2.4 per cent in 2008, up 0.8 points and 0.5 points respectively.

China provides one quarter of the annual growth rate of the world economy, and "if you add together Russia and India as well, you get over half of global growth coming from the emerging market countries," Charles Collyns, the IMF deputy director of research, said at a news conference.

Collyns said the IMF was also "expecting quite a sharp bounceback" in the US economy in the April-June period.

"Inflation remains generally well contained despite strong global growth, although some emerging market and developing countries have faced rising inflation pressures, especially from energy and food prices," IMF said.

The IMF forecast a 2.0 per cent rise in consumer prices in the advanced economies in 2007, up 0.2 points, and a 5.7 per cent increase in emerging markets, a gain of 0.3 points.

While inflation risks have edged up since the April 2007, IMF saw an increasing likelihood that central banks will need to further tighten monetary policy. The Fund also signaled a growing risk on financial markets "as credit quality has deteriorated in some sectors and market volatility has increased."


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IMF ups 2007-08 world economic growth forecast to 5.2 per cent