The International Monetary Fund yesterday said the global economy should bounce back solidly later this year thanks to an upturn in economic prospects in the US.
The IMF's World Economic Outlook - which takes the pulse of the world's economies twice a year - said the prognosis was much brighter than last November when all seemed gloomy and the full effects of the September 11 attacks were still unclear.
'There are now increasing signs that the global slowdown, which began in the middle of 2000, has bottomed out,' the IMF said. 'The events of September 11 had a short-run impact on activity, but - in contrast to the fears that some expressed - have not prevented a recovery in the first half of 2001.'
The IMF now forecasts global growth of 2.8% this year, up from a 2.4% estimate in November and higher than 2001's 2.5% expansion.
While the IMF said there were still risks to the outlook, chief economist Kenneth Rogoff said he saw little likelihood of a 'double-dip' recession in either the US or the global economy. Among those risks are volatility in the oil market and the danger of war in the Middle East.
The fund now forecasts a 2.3% US expansion this year, up massively from its 0.7% November forecast. The US economy grew by just 1.2% in 2001. For 2003, it expects the world's richest economy to grow by 3.4%.
The IMF's forecast for the euro zone was modestly higher than earlier estimates at 1.4% for this year and 2.9% for 2003 with sluggish German growth the main risk to the outlook there. The region grew by 1.5% last year.
The IMF is predicting GDP growth of 3.2% in Ireland this year, increasing to 6.2% in 2003.
For Japan, a contraction of 1% is seen this year after a 0.4% decline in 2001, followed by just 0.8% growth in 2003, making the world's second richest economy 'a source of serious concern'.
