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Wednesday, 25 April, 2001, 14:50 GMT 15:50 UK
IMF warns of global slowdown
Ship
Economic weakness spreads quickly in a world economy that relies on trade
The global economy will grow much slower this year than it did last year, the International Monetary Fund predicts in its sem-annual World Economic Forecast.

World economic growth
2000: 4.8%
2001: 3.2%

Source: IMF
But the dip will be shortlived and by next year growth will have climbed back in many regions, says the world's leading international financial institution.

The world economy will expand by 3.2% this year, down from last year' 4.8% growth rate, the IMF now predicts.

The report, which was leaked by the German finance ministry ahead of its official release date on Thursday, identified the US economic situation as the greatest risk factor for the world economy.

And it called for modest interest rate cuts in Europe to prevent the slowdown spreading.

The US and Europe have been arguing over the need for a rate cut, with the US Treasury Secretary warning that the US slowdown is bound to affect growth in Europe.

US, Japan and Europe

US growth will slow to 1.5% this year, from 5% in 2000, then pick up to 2.5% in 2002, the IMF report says.

Japan's economic growth will slow to 0.6% from 1.7% in 2000, then bounce back to 1.6% in 2002.

Economic growth in the regions:
US
2000: 5%
2001: 1.5%
2002: 2.5%

Japan:
2000: 1.7%
2001: 0.6%
2002: 1.6%

Eurozone:
2000: 3.4%
2001: 2.4%
2002: 2.8%

Source: IMF

The need for rate cuts

The IMF is urging rate cuts to help revive the world economy.

It welcomed the series of interest rate cuts in the US and saw no signs of inflationary pressures in that economy.

In the 12-member euro-zone, made up of the countries who are members of the s European single currency, growth will contract from 3.4% in 2000 to 2.4% this year, then rise to 2.8% next year.

The IMF would support a "moderate" cut in interest rate by the European Central bank, or even a large cut if the euro rises sharply or the economic slowdown gets worse.

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See also:

24 Apr 01 | Business
UK 'set to weather slowdown'
11 Jan 01 | Business
IMF warns of slowdown
25 Apr 01 | Business
EU downgrades growth estimate
25 Apr 01 | Business
Japan cuts growth estimate
11 Apr 01 | Business
Slowdown hits developing countries
25 Apr 01 | Business
US manufacturing remains weak
24 Apr 01 | Business
US consumer confidence falls
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