REPLAY IMF outlook for world economy ahead of annual meeting

1. Panelists walking in to room 2. Reporters 3. SOUNDBITE (English) Raghuram Rajan, International Monetary Fund Chief Economist: "The budding recovery we saw in spring has matured over the summer and become more widespread. Because of the tremendous growth in the early part of the year we have raised global growth forecast from the one we made in April to five percent in 2004. This is the fastest in nearly 30 years. For 2005, however, we have lowered our forecast slightly to 4.3 percent - largely reflecting the effects of higher oil prices." 4. Photographer 5. SOUNDBITE (English) Raghuram Rajan, International Monetary Fund Chief Economist: "While the downside risks have increased, global growth is still robustly above trend. Countries should use the relatively benign environment to recreate the room for policy manoeuvre that was given up while ensuring the recovery. There is also no better time for reform like the present when recent adversity reminds citizens of the cost of sitting still while better times help ease the pain of reform." 6. Reporters 7. SOUNDBITE (English) Raghuram Rajan, International Monetary Fund Chief Economist: "The issue of how serious is this - at what oil price do we start getting worried at - my sense is that it is a linear effect up to some point. That every additional dollar will weigh a little bit on growth. And our estimate, our rule of thumb is that every five dollar increase a year will effect global growth by about negative point three percent." 8. Briefing 9. SOUNDBITE (English) Raghuram Rajan, International Monetary Fund Chief Economist: "One would be hopeful that Iraq would rebound very strongly once the security situation is dealt with. There are signs, certainly of rebound within Iraq itself - goods in the markets and flourishing trade and so on - but really to get the economy going I think the security situation needs to be dealt with first." 10. Briefing ending SOUNDBITE: The global economy should register its strongest growth in three decades in 2004 despite soaring oil prices, which are expected to restrain the US expansion a little, according to the International Monetary Fund (IMF). In it latest World Economic Outlook, the IMF boosted its forecast for global economic growth to five percent for all of 2004, up from an April estimate of 4.6 percent. Should the new projection prove accurate, it would mark the strongest growth since 1973, said IMF's chief economist, Raghuram Rajan. It also would be a considerable pickup from 2003, when the global economy expanded by 3.9 percent. The IMF said global growth has been helped by factors including rising corporate profitability, improved stock markets, strong housing markets and gains in employment. While the new 2004 projection is encouraging for the global economy, which has been battered by recession, terror attacks and war, sharply rising oil prices are still of concern, the IMF said. Crude oil prices on Tuesday surpassed $50 a barrel for the first time but ended the day at $49.90 a barrel in trading on the New York Mercantile Exchange. Still even with oil prices in the $50 a barrel range, "we don't think the effect will be huge," said Rajan. He said that big developed countries, including the United States, are better now than in the past with dealing with oil price jumps and that central banks have gained greater credibility in combating inflation. For Japan, the IMF forecasts economic growth of 4.4 percent this year, slowing to 2.3 percent next year. Both estimates are higher than previous projections for each year made in April. Britain is expected to see its economy expand by 3.4 percent this year, slightly less than previously thought. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/6c72c74df289b476dff89796f6d5e231 Find out more about AP Archive: http://www.aparchive.com/HowWeWork