IMF Revises World Growth Estimate Upward

World economic growth will be higher in 1999 than previously projected because of the strength of the U.S. economy and a faster-than-expected rebound in Asia and Brazil, an International Monetary Fund official said. World economic output will expand between 2.5% and 2.6% this year, IMF economist Graham Hacche said, up from a projection of 2.3% the IMF made only two months ago. Hacche made the remarks during a video teleconference with the Development Bank of South Africa. That projection compares with the 2.5% growth posted for 1998 and the 4.2% for 1997. IMF officials in recent weeks have expressed the view that the world economy has survived capital flight and currency collapses in East Asia and Latin America and is beginning to turn around. “Certainly, the worst of the current emerging markets crisis seems to be behind us,” IMF Managing Director Michel Camdessus said in a speech in Philadelphia. “In Asia, the countries at the heart of the crisis are close to, or even past, the turning point,” he said, citing South Korea, whose economy grew 4.6% in the first quarter after contracting 5.8% in 1998. However, Hacche said the growth outlook for next year is “rather unclear” and that the balance of risks is on the downside. In April, the IMF forecast the world economy would expand 3.4% in 2000. U.S. economic growth this year is “likely to be a little above 3.5%,” up from the 3.3% estimated in the IMF’s World Economic Outlook released in April. On Latin America, Hacche said the region won’t dip into recession this year, but that neither would it post growth. In April the fund projected the region would contract 0.5%. East Asian economies are also recovering after a year of deep recession and rising inflation, interest rates and unemployment.