Chinesepod - IMF says China to be leader in world economic growth

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BIZCHINA / News

IMF says China to be leader in world economic growth

(Shenzhen Daily)
Updated: 2007-08-01 16:28

China and India are the new engines of world economic growth, replacing
the United States and other developed countries, International Monetary
Fund managing director Rodrigo Rato was quoted by media as saying
yesterday.

He said China overtook the United States this year to become the biggest
contributor to world economic growth.

“For the first time, the largest contribution to global growth will now
be made by China,” Rato told a business conference in the Philippines.

“Looking ahead, we expect this pattern of growth to continue ... we
expect China — and increasingly India — to grow in importance as
engines of global growth.”

He said China would grow by more than 11 percent and India at around 9
percent this year, with almost equal rates in 2008.

After slowing down, the U.S. economy would “regain momentum gradually
as the drag from the current housing correction and the softness in the
business sector dissipates.”

“Prospects in Europe and Japan remain good,” Rato added, without
giving specific figures.

“The outlook for the global economy is generally good and the economic
prospects of most countries in emerging Asia are also good,” he said.

At the same time, Rato warned that the oil market and capital flows were
a major concern.

While the global economy had easily shrugged off the high oil prices
driven by increased demand, “a supply shock could be much more damaging
to global growth.”

Inflows of capital to emerging economies could “complicate
macro-economic management and expose the countries that receive them to
an abrupt reversal of flows when sudden shocks occur,” he added.

Rato also said there was a “danger of a backlash against
globalization” as many people felt mainly benefited the wealthy and
educated.

He said the best way to address this inequality was to increase
investment in education and technology and give the poor more access to
infrastructure, utilities and financial services so they could also
benefit from globalization as well.

(For more biz stories, please visit Industry Updates)

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