Global Economy Growth To Be Slower Than Last Year
The International Monetary Fund expects the global economy to grow at a slower pace of 4.3% this year and 4.4% next year compared to last year’s quicker pace.
Imbalances such as the U.S. trade deficit and Europe’s growth gap have not been fixed. The IMF cites politicians failing to live up to their promises as one of the reasons.
“The balance of risks to the short-term outlook is tilted to the downside,” said the IMF.
According to an article at Boston.com,
“A recovery in the euro area and in Japan — both economic laggards in recent years — coupled with still-buoyant activity in Asian countries should nudge growth up to 4.4 percent in 2006. The IMF said the global expansion was becoming more uneven, with growth still reliant on the United States and China.
IMF chief economist Raghuram Rajan said Japan’s economy was still ”moody” but that with better economic fundamentals, growth could pick up to 1.9 percent next year. Rajan said investment in China, which accounted for 45 percent of the country’s gross domestic product in 2004, had picked up again, despite measures to cool the economy.”
”We have been concerned about the quality of investment, as have the Chinese authorities,” he said. ”Financial sector and public sector reform will be critical to improving it.”
The IMF said that the success of the efforts of the Group of Seven countries and China has been limited.
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