July 26, 2007	Thursday	Rajab 10, 1428

WASHINGTON, July 25: The International Monetary Fund on Wednesday raised its 2007 and 2008 forecasts for world economic growth to 5.2 per cent, and said China was poised to become its most powerful driver.

The IMF hiked by 0.3 percentage points its 4.9 per cent growth forecast for both years in its World Economic Outlook (WEO), published in April, after robust growth in emerging markets.

“The global economy continued to expand at a brisk pace in the first half of 2007,” the IMF said in a statement.

“The major upward revisions have been for emerging market and developing countries, with growth projections substantially marked up for China, India and Russia.”

China was expected to see growth of 11.2 per cent in 2007, 1.2 percentage points higher than forecast in April. The IMF revised upward by 0.6 points India’s pace, to 9.0 per cent, and Russia’s, to 7.0 per cent.

For the United States, the world’s biggest economy, which grew a tepid 0.7 per cent in the first quarter, the IMF lowered its 2007 forecast by 0.2 points to 2.0 per cent.

“Although growth in the United States slowed in the first quarter, recent indicators suggest that the economy regained momentum in the second quarter,” the Washington-based financial institution said, predicting a “return to potential by mid-2008.”

The US growth forecast for 2008 was left unchanged at a 2.8 per cent pace.

Charles Collyns, the IMF deputy director of research, said at a news conference that the IMF was “expecting quite a sharp bounce back” in the US economy in the April-June period.

US government figures due on Friday on second-quarter GDP growth would come in over three per cent, he predicted, “with a pickup in the second half of the year to maybe 2.5-2.75 per cent” mainly on a rebound in business investment and exports.

China for some time has been the largest contributor to global growth measured in purchasing power parity terms that discount exchange-rate differences between countries, at 15 per cent, he said.

“This year for the very first time, with its very strong growth expected, and with the growth slowdown in the US, China will be contributing the largest part to the increase in the global growth measured at market exchange rates as well as purchasing parity terms,” Collyns said.

—AFP