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IMF lifts world growth estimates IMF lifts world growth estimates
(about 4 hours later)
World economic growth will be higher than previously thought at 5.1% in 2006 and 4.9% in 2007, the International Monetary Fund (IMF) has said.World economic growth will be higher than previously thought at 5.1% in 2006 and 4.9% in 2007, the International Monetary Fund (IMF) has said.
The predictions are both 0.25% higher than the IMF outlook given in April.The predictions are both 0.25% higher than the IMF outlook given in April.
However, the IMF warned that global imbalances posed risks - in particular, the US budget deficit and China's vast trade surplus.However, the IMF warned that global imbalances posed risks - in particular, the US budget deficit and China's vast trade surplus.
The report was released at the start of the IMF and World Bank's annual meetings in Singapore.The report was released at the start of the IMF and World Bank's annual meetings in Singapore.
ThreatsThreats
Surpluses in oil producing nations will stay high and the eurozone economy will continue to recover, the IMF predicted.Surpluses in oil producing nations will stay high and the eurozone economy will continue to recover, the IMF predicted.
The potential for a disorderly unwinding of the global imbalance remains a concern IMF Concerns over Singapore talks
The exception is Germany, where the IMF believes growth will slow as a result of an increase in VAT to 19%.The exception is Germany, where the IMF believes growth will slow as a result of an increase in VAT to 19%.
There was a one-in-six chance that growth could fall to 3.25% in 2007, the IMF said.There was a one-in-six chance that growth could fall to 3.25% in 2007, the IMF said.
Rising oil prices and an economic downturn in the US triggered by a fall-off in the housing market were among factors posing the biggest threats to continuing global growth, it saidRising oil prices and an economic downturn in the US triggered by a fall-off in the housing market were among factors posing the biggest threats to continuing global growth, it said
US growth would slow from 3.4% to 2.9%, it predicted.US growth would slow from 3.4% to 2.9%, it predicted.
"The potential for a disorderly unwinding of the global imbalance remains a concern," the report said."The potential for a disorderly unwinding of the global imbalance remains a concern," the report said.
'Weigh-up risks''Weigh-up risks'
Trading imbalances lie at the heart of many of the fears. China posted a record of $18.8bn (£10bn) trade surplus with the rest of the world in August.Trading imbalances lie at the heart of many of the fears. China posted a record of $18.8bn (£10bn) trade surplus with the rest of the world in August.
By contrast the US, the world's largest economy, has seen its trade deficit reach over $64bn.By contrast the US, the world's largest economy, has seen its trade deficit reach over $64bn.
One explanation for this huge gap is the weakness of China's currency, which makes Chinese goods comparatively cheap, thereby boosting exports.One explanation for this huge gap is the weakness of China's currency, which makes Chinese goods comparatively cheap, thereby boosting exports.
The IMF said central banks had to weigh up the risks of growth and inflation, saying some more interest rate tightening might be necessary.The IMF said central banks had to weigh up the risks of growth and inflation, saying some more interest rate tightening might be necessary.
Japan, which moved away from zero interest rates in June after six years, should continue to increase rates gradually, it added.Japan, which moved away from zero interest rates in June after six years, should continue to increase rates gradually, it added.
The IMF/World Bank gathering has already attracted controversy, with Singapore refusing to lift its ban on street demonstrations despite calls from non-governmental organisations (NGOs) and activists.The IMF/World Bank gathering has already attracted controversy, with Singapore refusing to lift its ban on street demonstrations despite calls from non-governmental organisations (NGOs) and activists.
It also comes at a time when the IMF is under pressure to reform, giving greater decision-making to countries such as China and developing nations, including those in Africa.It also comes at a time when the IMF is under pressure to reform, giving greater decision-making to countries such as China and developing nations, including those in Africa.