Mark Tran Wednesday September 25, 2002
A plunge in share prices poses a serious threat to world economic growth, the International Monetary Fund warned today. In a gloomy forecast, the IMF yet again cut its expectations for global growth in its latest "World Economic Outlook" from its previous economic projections in April.
"There is a significant risk of a more subdued recovery, especially if the impact of recent equity market declines in both the United States and Europe proves greater than presently expected," the IMF said.
In recent weeks, markets in Europe and the US have hit their lowest levels in five years over worries about the US recovery and the threat of war in Iraq. The IMF warned that even its scaled-back growth forecasts could be hit if oil prices were to rise further. Oil prices have recently reached a 19-month high of $30 a barrel on fears of disruption in oil supplies if war breaks out in Iraq.
"Developments since the first quarter have intensified concerns about the durability and sustainability of the recovery," the IMF said in its downbeat report ahead of next week's annual meeting of the IMF and the World Bank in Washington.
The IMF forecast the global economy would grow by 2.8% this year, up only slightly from last year's 2.2% growth, its worst performance in a decade. For 2003, the IMF put growth at 3.7%, a reduction of 0.3% point from its April forecast.
For the US, the pillar propping up the global economy, the forecast were pared back even more sharply, with growth this year put at 2.2%, down 0.1% from April, and 2.6% in 2003, compared to 0.8%.
http://www.guardian.co.uk/recession/story/0,7369,798949,00.html
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