Finance officials forecast growth - East Valley Tribune: Business

Finance officials forecast growth

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Posted: Monday, April 24, 2006 11:55 am | Updated: 5:04 pm, Fri Oct 7, 2011.

The global economy is enjoying robust growth, but that doesn’t mean there aren’t dangers ahead. Oil prices have topped $75 per barrel, and America’s trade deficit keeps getting bigger.

Finance ministers who direct the policies of the International Monetary Fund and the World Bank on Sunday wrapped up three days of talks aimed at making sure the dangers don’t derail economic growth.

They also worked on remodeling the two 61-yearold institutions to make sure they can meet the financial challenges of the 21st century.

Officials agreed that growth is exceptional right now. The IMF projected the global economy will expand by 4.9 percent this year and 4.7 percent in 2007.

‘‘It would be fair to say to the world, ‘You have never had it so good,’ ” IMF chief economist Raghuram Rajan said. ‘‘But challenges are building in the background.’’

There is the concern that the continued surge in oil prices will cut into consumer spending on other items, a change that could slow growth in the United States, which has been the locomotive pulling the global economy.

America’s record trade deficit, which hit $723.6 billion last year, is causing fear that foreigners will suddenly stop holding the dollars required to finance such deficits. That could send U.S. interest rates surging and push the world’s largest economy into a recession.

The finance ministers resolved to modernize the IMF to better deal with global imbalances and try to bring more order to global oil markets.

The world’s seven wealthiest industrial countries met Friday night with three big oil-producing countries — Saudi Arabia, Russia and the United Arab Emirates — to explore improving data about production and reserves to give oil markets better information. The G-7 countries also called for increased investment in exploration and refinery capacity to boost supplies.

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