November 09, 2007	Friday	Shawwal 27, 1428

WASHINGTON, Nov 8: The International Monetary Fund said on Thursday the world economy is weathering a recent surge in oil prices because it is driven by increased demand rather than supply constraints.

“We expect that prices will remain high and be volatile going forward,” IMF spokesman David Hawley said at a news briefing, when asked about the impact of a record-breaking surge near the 100-dollar a barrel level.

“The output effects of higher oil prices, however, appear manageable, in particular to the extent that price rises are being driven by sustained, strong demand growth in emerging markets such as China rather than supply shortfalls,” he said.

The impact of the oil surge on the overall world economy “is likely to be moderate,” he added.

Hawley said the price surge has been catalysed by heightened geopolitical risks and by bad weather in the Gulf of Mexico.

In addition, it “reflects increasingly tight fundamentals including sluggish supply, greater-than-expected declines in oil field production and continued strong demand growth in emerging markets.”—AFP