Top economies fuel another year of strong global growth

[Flabbergasted]

http://business.timesonline.co.uk/article/0,,16849-2142138,00.html

The Times April 20, 2006

From Gary Duncan, Economics Editor, In Washington

UPGRADES to the expected performance of leading economies around the world underpinned buoyant forecasts yesterday from the International Monetary Fund, which showed the world to be on course for five consecutive years of growth at more than 4 per cent.
After a weak final quarter last year, the United States remains the “main engine” for global growth, the IMF said, but it also sharply upgraded its projections for the reviving Japanese economy, and was cautiously hopeful over Europe’s strengthening upturn.

The US economy is now forecast by the IMF to expand by 3.4 per cent in 2006, up from the 3.2 per cent that it predicted last autumn and in the face of an expected easing off in activity in the second half of this year. The US is now predicted to slow just a fraction in 2007, with growth projected at 3.3 per cent.

However, the IMF pointed to a series of risks that could derail the positive scenario for the US. It said that the key uncertainty for America was over house prices, which looked overvalued. The US is also vulnerable to any swing in investor sentiment that could trigger a tumble in the dollar and a “spike” in long-term interest rates, the IMF argued. It urged the Bush Administration to take “bolder” action to tighten the US Government's budget, criticising current plans as “both overoptimistic and unambitious”.