IMF world economic forecast briefing for the Spring 2007

2006 was another robust year for the global economy. With growth at 5.4 percent, it was the fourth consecutive year of strong global activity. Indeed, we have not seen a four-year span like this since the early 1970s, said Simon Johnson, the Economic Counsellor and Director of Research, IMF at the World Economic Outlook Press Conference on April 11, 2007 at Washington, D.C.

Notwithstanding the ups and downs of financial markets recently, the global economy is set for another good year in 2007. Indian International Monetary Fund (IMF) central forecast sees global growth slowing mildly to 4.9 percent this year with somewhat slower growth in the United States, continued solid growth in Europe and Japan, and continued impressive growth in emerging markets and developing countries led by China and India.

While the U.S. economy has slowed, the rest of the world has remained on track. The euro area grew at its fastest pace in six years in 2006, and the economy's forward momentum looks solid. Area-wide growth is expected to moderate from 2.6 percent in 2006 to about 2.3 percent in 2007 in our forecast, partly reflecting fiscal consolidation in Germany and Italy and the effects of past monetary tightening. Growth has been boosted by employment gains and rising productivity, a healthy combination that Europe has not seen in some time.

India's broad-based expansion gathered momentum in the course of last year, running at around 9 percent, but growth should moderate some in 2007. However, spare capacity in the economy remains very low, and overheating remains a risk, despite monetary policy tightening. Elsewhere in emerging Asia, the near-term outlook remains very positive, partly reflecting intraregional trade linkages and China's strong economy as well as prudent macroeconomic management.

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