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IMF Will Raise its Forecast for World Economic Growth
(SOURCE: China View via I.E. Canada e-News Bulletin, June 27, 2007)
The International Monetary Fund will raise its forecast for world economic growth and sees increasing inflation pressures, IMF chief economist Simon Johnson said.
"Global growth is stronger than we had expected in April," Johnson, the IMF economic counsellor and director of research, said in Frankfurt yesterday.
"Inflationary pressures are definitely building up."
The Washington-based IMF in April predicted world economic growth of 4.9 percent this year and next after 5.4 percent expansion in 2006. This year will mark the fifth consecutive year of global growth in excess of four percent - the longest streak of sustained expansion in three decades, Bloomberg News said.
"We are more optimistic on Europe and emerging markets," Johnson said. "We are a bit more negative on the U.S., but we still think there will be a rebound in the third and fourth quarters."
Central banks will need to continue raising interest rates to quell inflation as the "golden age" of global economic expansion continues, the Bank for International Settlements said on Sunday.
"Inflationary pressures might turn out to be more significant than anticipated," BIS General Manager Malcolm Knight said. "Authorities should continue gradually to normalize the level of policy interest rates" as the global economy extends what "may well go down in history as a 'golden age'."
The European Central Bank, the Bank of Japan, the People's Bank of China and the Bank of England have all indicated that further rate rises may be in the pipeline this year, while Merrill Lynch & Co and Goldman Sachs Group Inc expect the U.S. Federal Reserve to leave rates at a six-year high rather than cut them.