Wednesday, September 20, 2000

World economy outlook good

Forecast made despite oil, euro worries

By Dirk Beveridge
The Associated Press

        PRAGUE, Czech Republic — Surging oil prices and the sinking euro are rattling markets, but the International Monetary Fund predicted Tuesday that the world economy could demonstrate better growth this year than it has in more than a decade.

        Economies should also improve at healthy rates in 2001, led by the powerful U.S. expansion, more growth in Europe and a continued recovery from the Asian financial crisis of 1997-98, the IMF said in its latest World Economic Outlook.

        The IMF predicted that the global economy will grow by 4.7 percent this year, a 0.5 percentage point increase from the last such prediction in May.

        That would match growth last recorded in 1988.

        But oil prices hovering at levels unseen since the 1990 Persian Gulf crisis could spoil the rosy picture, IMF officials acknowledged a week before the annual meetings here of the IMF and its sister institution, the World Bank.

        Michael Mussa, the IMF chief economist, warned of several other potential downsides, including the euro's slide against the U.S. dollar and the Japanese yen, as well as the record U.S. trade deficit.

        “Strong growth is recorded in virtually all the world's regions,” Mr. Mussa told a news conference. “And it should sustain better than 4 percent growth next year, but there are still some downside risks because of oil prices.”

        Activists who see economic globalization as a menace to ordinary people everywhere say they will be out in force as the IMF and World Bank annual meetings formally begin next Tuesday. They hope thousands of people will block roads in a repeat of demonstrations that marred a World Trade Organization meeting last year in Seattle.

        “The programs of the World Bank are displacing 3.2 million people, and that's the real violence,” said Alice Dvorska, a spokeswoman for the Initiative Against Economic Globalization.


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