The managing director of the International Monetary Fund (IMF) and the U.S. Treasury secretary say growth prospects have improved and 2006 should be a good year.
Only three months ago there were fears that sharply higher oil prices could plunge the world economy into recession. But IMF Managing Director Rodrigo de Rato says the world economy is doing better than had been expected.
The former Spanish finance minister did not say by how much economic activity had picked up, but the IMF in September said global growth would total 4.3 percent both in 2005 and 2006. At a briefing with reporters Wednesday, Mr. de Rato said growth had accelerated in both developing and developed economies, including Europe, China, the United States and South America. The IMF leader called on policy makers to use the opportunity of strong growth and low interest rates to reduce potentially destabilizing global imbalances.
"We have to be aware that although we are in a very favorable situation with growth accelerating and inflation not being too strong around the world, markets can change very quickly," said Mr. de Rato.
Separately, U.S. Treasury Secretary John Snow said the U.S. economy is likely to continue to grow at a more than three percent rate in 2006. Mr. Snow said the economy has been particularly resilient, creating 1.8 million jobs this year, despite higher oil prices and hurricanes that devastated the southern Gulf coast.
Mr. de Rato expressed satisfaction that higher growth has translated into significant reductions in poverty.
"The fruits of growth are being enjoyed by more people. We see poverty rates falling in countries like India and Brazil, and many others," he added.
Mr. de Rato was particularly upbeat on Brazil, Latin America's largest economy, where growth and foreign earnings have picked up to the point that it could this week repay early its $15 billion debt to the IMF.