SINGAPORE, Sept 14: The IMF has urged the world leaders to refocus from spending the dividend of high growth to reinvesting for the future. This piece of advice came at the launch of an annual report by the fund.

The IMF launched “The World Economic Outlook 2006” here on Thursday. Speaking at the press conference, IMF Economic Counsellor and Director Research Department Raghuram Rajan predicted a mild slowdown. He also presented views on how the fund expects different regions of the world to perform in the short-term.The forecast for the global growth has been marked up to 5.1 per cent in 2006, slowing down a bit to 4.9 per cent in 2007. The slowdown in the US, inflation and growing global imbalances were identified as major risks that the world economy is faced with.

Rajan attributed the current strong world economy to policies that enhanced competition, economic sustainability and flexibility. He, however, said that the world today was faced with more uncertainty than before.

"This strong central forecast is surrounded by more uncertainty than usual, with risks tilted to downside. The key short term risks include; a sharper-than-projected slowdown in the US, coupled with uncertainty about the extent to which the word growth is autonomous of the US; a further increase in global inflationary pressures, stemming from tight labour and commodity markets; an abrupt unwinding of global imbalances," the director said.

He termed emerging Asia the world’s most dynamic region in 2006, driven by buoyant China and India. "For China we project 10 per cent growth both for this and next year. The economy remains heavily reliant on fixed asset investment, however, the excess liquidity contributing to the problem.”

His advice to the Asian giant: "Moving all prices to the market levels may cause pain, but it is the ultimately the only way to go".

On India he said: "While the authorities should be commended for seeking to spread the benefits of growth, experience suggests this is the best done by expanding opportunity, through improvement in education, healthcare, finance and infrastructure, and by adopting clear and stable rules for business, rather than offering often-misdirected subsidies, guarantees, and tax sops that a stretched budget can ill-afford".

The World Economic Outlook (WEO) presents the IMF staff’s analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.,) and in many individual countries.

It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF’s global surveillance activities.