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Wednesday, March 12, 2003

Kohler Doing His Best to Talk Up the World Economy

The head of the IMF is trying to talk up the world economy, and I think that's just fine, because I think that's what he is paid for. I mean, imagine if he tried to talk it down. Responsible economists are in a difficult trap between a rock and a hard place. Difficult question: how much reality to they need to inject into their 'promo'?. Well, I simply want to flag the fact now that I don't agree. Yes, I am convinced that the financial markets now are too pessimistic, and, yes, I am convinced that we can see a rebound. But when this is all over, what will we have: a US centric world economy. And as Steven Roach keeps reminding us, it's difficult to see a global economy which is firing on only one cylinder pushing forward a sustained expansion. I'm afraid we're back with Christine Keeler and: he would say that wouldn't he.

The global economic recovery should accelerate once tension over the Middle East has dissipated, the head of the International Monetary Fund said on Tuesday. In one of the IMF's first public comments on the economy since the start of the build-up to war with Iraq, Horst Köhler, the fund's managing director, said that global growth this year should slightly outstrip 2002's 3 per cent rate. Such a projection would be substantially lower than the 3.7 per cent in the IMF's last official forecast in September. But Mr Köhler said the underlying conditions existed for a recovery, including rapid technological progress. "Although we know that full confidence is unlikely to return until the geopolitical tensions have subsided, we must avoid undue pessimism," Mr Köhler told a conference in Madrid. "Despite the series of large shocks in recent years, the global economy and the international financial system have proven remarkably resilient." Financial markets should "bounce back" from their current travails, he said.
Source: Financial Times

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