IMF predicts global economy will pick up speed this year

1. Wide of the International Monetary Fund (IMF) panel seated at news conference 2. SOUNDBITE: (English) Raghuram Rajan, IMF Economic Counsellor & Research Department Director: "In sum, it would be fair to say to the world you''ve never had it so good - but the challenges are building in the background. For instance, global competition may not continue to be a supportive crutch for central bankers in holding down inflation. Spare capacity is decreasing worldwide as evidence most recently by increasing commodity prices." 3. Cutaway of reporters 4. SOUNDBITE: (English) Raghuram Rajan, IMF Economic Counsellor & Research Department Director: "We expect the US economy to slow in the second half, but growth should remain above trend. These signs, of a rebalancing in world growth are particularly welcome. The risks to this strong central forecast are tilted to the downside - they include the possible inflationary and growth consequences of the still high and volatile oil prices, rising real interest rates and possible exchange rate volatility." 5. Cutaway of reporters 6. SOUNDBITE: (English) Raghuram Rajan, IMF Economic Counsellor & Research Department Director: "In the Euro area, forward looking indicators such as business confidence continue to signal that the recovery in Europe is strengthening, but this is yet to be confirmed by concurrent data. Also consumption is still weak. Nonetheless, we remain optimistic that Euro growth will pick-up to about two percent in 2006 and that pick-up will be broad based. Europe''s challenge still remains to increase its potential growth rate to a level that enables its citizens to continue to enjoy their enviable blend of work and leisure. More insecurity in the workplace may well be the price that has to be paid for European the way of life." 7. Cutaway of reporters 8. SOUNDBITE: (English) Raghuram Rajan, IMF Economic Counsellor & Research Department Director: "In Japan, the economic tide continues to rise lifting inflation, land prices and bank lending. Improving labour market conditions are likely to support consumption growth. For Japan the challenge is how to normalise monetary and fiscal policy without setting back the ongoing recovery, even while coming to terms with a rapidly aging population. China''s economy is expected to continue to grow at a blistering place of nine point five percent. The underpinnings of growth, however, need to move from investment and net exports towards consumption. It is therefore good news that the People''s Congress wants to promote health and education spending and build social safety nets. All measures that should increase consumption in the medium term. As we have consistently argued such steps would be most effective if supported by financial sector reforms and more exchange rate appreciation." 9. Wide of IMF panel leaving news conference STORYLINE: The International Monetary Fund (IMF) has released its latest economic forecast, finding that global finances are expected to pick up a little more speed in 2006 and log another year of brisk growth. Researchers at the IMF found the world''s economy coped surprisingly well with fallout from natural disasters and lofty energy prices. The world economy expanded by 4.8 percent last year and is projected to grow by 4.9 percent this year. Last year''s performance actually turned out better than the IMF had predicted, and the IMF''s forecast for 2006 was upgraded. Still, the IMF''s World Economic Outlook predicts that risks remain - especially if oil prices continue to surge. IMF''s chief economist, Raghuram Rajan, also warned of unpredictable risks associated with a possible outbreak of the deadly bird flu. Next year, economic activity should clock in at 1.9 percent. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/b41a94936db8ad22ef989f9d0b3f4af0 Find out more about AP Archive: http://www.aparchive.com/HowWeWork