The International Monetary Fund has ratcheted up its growth forecasts for the world economy this year and next, as the U.S. economy maintains momentum and key emerging markets perform better than expected, according to a draft of the IMF's World Economic Outlook.
But in the draft document, published in Dutch on the Dutch finance ministry's website, the IMF warned that there were risks attached to imbalances in the U.S. economy. Timely interest rate increases might
be necessary to prevent a hard landing.
The IMF forecast the world economy would expand 2.8 percent in 1999, compared with the 2.3 percent sketched in the previous IMF report in May. In 2000 the global economy would grow 3.4 percent, instead of 3.3, the IMF said.
"The growth forecasts for all nations involved in the Asia crisis have been upped and recessions in Russia and Brazil are less deep than originally expected," it said.
"Growth in Japan and Europe seems to be picking up and the expansion in the United States is continuing, almost without price or wage pressure."
The fund penciled in 3.7 percent growth for the United States in 1999 and 2.6 percent in 2000, compared with 3.0 and 2.2 percent respectively in its earlier report.
But it said macro-economic inequalities, including high-priced stocks and the high value of the dollar, could lead to a hard landing.
"To minimize the risks and to avoid overheating timely rate increases are probably necessary," the report said.
It noted signs the Japanese economy was picking up to a small extent and said domestic policy must now seek a balance between contradictory long and short-term goals.