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IMF gives leaders gloomy
assessment of world economy
Watford—The head of the International Monetary Fund gave a gloomy
report on Saturday on prospects for the world economy to a dozen
leaders debating how to respond to global financial turmoil. IMF
Managing Director Dominique Strauss-Kahn told a high-powered forum
hosted by British Prime Minister Gordon Brown that most of the
downside risks to the world economy feared six months ago had now
become reality. “The forecasts we are going to release in a few days
are not really improving,” Strauss-Kahn said. The IMF is due to
release its twice-yearly World Economic Outlook next week, just
before the IMF’’s spring meetings in Washington. The IMF now expects
global growth to slow to 3.7 percent this year, down from its
January forecast of 4.1 percent and lower still from the 4.8 percent
rate it predicted in October last year.
Brown has called together a dozen leaders from centre-left parties,
including South African President Thabo Mbeki, Australian Prime
Minister Kevin Rudd, Austrian Chancellor Alfred Gusenbauer and
Ghana’’s President John Kufuor, to discuss globalisation, climate
change and reforms to global institutions at a conference outside
London. Also attending are the heads of the IMF, World Trade
Organisation, the African Development Bank and several UN agencies.
Brown is using the forum to promote his ideas for the reform of
global financial institutions to tackle the world-wide credit crunch
sparked by the US sub-prime lending crisis. Brown is pressing for
global, rather than national supervision of financial markets, for
banks to come clean on the losses they have suffered due to the
sub-prime crisis and for a global early warning system to be set up
to pre-empt new crises.
One bright spot among the discussions was talk of improving
prospects for a breakthrough in the long-running talks on world
trade liberalisation. WTO chief Pascal Lamy said the Doha round of
talks were “inevitably long and complex”. “My feeling is that we are
now reaching a stage where it (an agreement) could happen,” he said.
Several leaders said rising food and energy prices posed a new
economic challenge, particularly for poor countries. —Agencies
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