Emerging market economies such as those in central Europe, Latin America and China are performing well, and the US economy looks set to continue strong growth with little inflation, International Monetary Fund (IMF) Managing Director Rodrigo de Rato said on Wednesday.
De Rato warned that developing countries should take advantage of the benign financial conditions to further strengthen their own economic fundamentals. Previous reforms have paid off, in a relatively short period of time, for countries such as Brazil and Turkey. Economies around the world are now better positioned to absorb shocks that would have brought recession just a few years ago, he said. But the current low,long-term, interest rates that have helped developing economies this year, could jump quickly, he said.
Reforms are also needed in the industrial countries, Rato said, ticking off a familiar agenda including a budget tightening in the US and structural reforms to make Europe more competitive. Japan should also begin to prepare for budget reforms to reduce high public deficits and debt levels, de Rato said.
The IMF chief said the world economy is on track to log solid growth this year and is expected to perform well next year, despite high energy prices. In late September, the IMF projected that the world economy would grow by a healthy 4.3 percent in
2005 and 2006. The IMF chief wouldn't reveal the fund's new economic growth projections. He said updated figures would be released in the spring.