United Press International / By JORGE E. BANALES
WASHINGTON, April 12 (UPI) -- Economic recovery throughout the world after the 1997 Asian financial crisis has been stronger than expected, the International Monetary Fund said Wednesday.
The IMF's World Economic Outlook report estimates that the world's economy will grow at a rate of 4.2 percent this year and 3.9 percent in 2001.
Compared to the report six months ago, the forecast has improved for all regions of the world, except for Japan and Africa.
The IMF said the financial crisis that sprouted in the summer of 1997 in Southeast Asia, which at the time was feared to be the worst in 50 years, ended up being "relatively light and brief."
"The risks now appear to be on the upside, given the continued strength of the United States and the possibility that European recovery could be stronger," the IMF said.
The organization, however, expressed a note of caution saying it believed that current levels of U.S. economic growth were not sustainable. The IMF said there were "imbalances" derived from the high U.S. deficit, the excessive strength of the dollar against the euro and financial market enthusiasm. It indicated that there are "uncertainties" if the economic expansion of some countries continues.
"An inflation in equity price could be destabilizing because it could encourage households and business to consume and invest in excess and that can make the market vulnerable to a downward adjustment in the stock prices."
But the report said that the implementation of the right and solid economic policies in developing countries has been one of the causes of recovery, which is especially strong in Asia and to a lesser extent in Latin America due to the region's dependence on raw material.
The IMF estimates that the world's gross national product will grow at a rate of 4.2 percent in 2000, but that it could reach 4.9 percent in case the U.S. economy grows at a faster rate than expected, above the 4.4 percent this year. In October, the Fund had estimated that the world's GNP would increase by 3.5 percent and that in 2000 the U.S. economy would grow at a rate of 2.6 percent.
The IMF expects the European economy to grow at a rate of 3.2 percent this year, four-tenths more than it predicted in October. However, the IMF does not rule out economic growth rate in Europe to reach 4 percent if the U.S. economy does not suffer a slowdown.
The report predicts that in 2001 the economic growth of the 11 countries that belong to the "euro zone" will also grow at a rate of 3.2 percent, 0.2 percent more than expected six months ago. Regarding Latin America, the IMF report indicates economic growth in the region is expected to be at a rate of 4 percent in 2000 and 4.7 percent in 2001, 0.2 percent more than in forecast in October. The IMF expects economic growth in the region, which in 1999 suffered a serious recession with an economic growth rate of merely 0.1 percent. The report says that the region's dependence on international funding continues to be the principal cause of its vulnerability. However, the IMF praised governments in the region that have put forward policies to contain the fiscal deficit.
In Brazil, the IMF estimates a 4 percent growth in the GNP this year, 1.5 percent more than it predicted in October of last year, and 4.5 percent in 2001.
The report states that "in Brazil economic policies have served to reduce the severity of the crisis and to prepare the territory for the recovery of the upcoming period."
The IMF estimates a 6.2 percent economic growth rate in Asia for this year and 4.9 percent for 2001 -- 0.7 and 0.8 percent more respectively than it predicted in October.
However, this recovery does not include the world's second most powerful economy, Japan.
The IMF scales back its earlier estimates and says Japan's economy will grow at a rate of 0.9 percent -- a recession.
The Fund, which in October had forecast a 1.6 percent increase in Japan's GNP, says that in 2001 the Asian country can expect a 1.8 economic growth rate -- 0.6 less than predicted last year.
Africa is the only region in the world for which the IMF worsens its economic outlook, estimating a growth rate of 4.4 percent in 2000 -- 0.4 less than it had predicted in October.
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