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IMF says US will drive world economy this year


IMF says US will drive world economy this year


The International Monetary Fund believes the world economy will expand by 4.3%this year as stronger-than-expected growth in the United States, China and elsewhere balances weakness in Europe and Japan. IMF chief Rodrigo Rato recently warned the massive US trade deficit coupled with rising interest rates and high oil prices threaten to combine to derail growth this year.

The world economic outlook was obtained ahead of publication by the Reuters news agency. It shows the IMF now expects the US economy to grow 3.6% this year and next. Japanese GDP this year would rise just 0.7%, that is a big drop from the earlier forecast of 2.3%. Euro zone growth will be just 1.6%, down from the prediction last autumn of 2.2%. The IMF economic outlook also says the European Central Bank should be prepared to cut interest rates if necessary. It believes there is a risk that current account imbalances will push up the value of the euro. The ECB has left its key lending rate at 2% since June 2003 to stimulate the economy, but economists expect it to raise that later this year if the recovery regains some momentum.
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