BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Thursday, 26 April, 2001, 05:13 GMT 06:13 UK
Clashes loom at IMF meeting
Demonstrators disrupted the Summit of the Americas in Quebec
Demonstrators disrupted the Summit of the Americas in Quebec
By BBC News Online's North America business reporter, David Schepp

The prospect of a slowdown in worldwide economic growth is likely to raise tensions at a meeting of the world's economic leaders this week in Washington, DC.

But it is not the only issue that the International Monetary Fund (IMF) and World Bank must contend with at their annual spring meeting nations, which starts Thursday.

US Treasury Secretary O'Neill warns Europe on growth
US Treasury Secretary O'Neill warns Europe on growth
A row has developed between Europe and the US over how to handle the economic slowdown, with US Treasury Secretary Paul O'Neill lobbing criticism at his European counterparts for their decision to stand pat on interest rates.

"Once conditions reach the degree of tension, which they clearly have, there is no substitute for a face-to-face exchange of views," says CSFB chief economist Giles Keating.

"They they'll agree to stop blasting each other in public," Mr Keating says.

That will come on Saturday when the G7 finance ministers, including Mr O'Neill will meet informally on the sidelines of the IMF gathering.

The tension stands in sharp contrast to the unity at the G7 meeting last September in Prague, when ministers endorsed moves by the Federal Reserve and other central banks to help prop up the euro.

The G7, or group of seven nations, include the US, Canada, Germany, France, Italy, Britain and Japan.

Economic slowdown

The IMF, which is due to release its semi-annual World Economic Outlook on Thursday, has sharply slashed its economic forecasts for global growth.
Will tear gas replace negotiations in Washington?
Will tear gas replace negotiations in Washington?

It now says - in a document that has been widely leaked -that world growth will slow to just above 3% this year.

The jury is still out on whether the US will lead the world into a recession. Much of the recent economic data out of Washington shows that while the US economy is slowing, it is not heading for recession - which is negative growth.

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

On Tuesday, President George W Bush's nominee to lead the Council of Economic Advisors, Robert Glenn Hubbard, told the Senate Banking Committee that the US is in a "growth slowdown".

"The rate of growth is unacceptably low," he said. "But we are not in the present time, at least, likely to be in a recession," Professor Hubbard told the committee.

Help for the poor

The global slowdown is exacerbating the problems of developing countries, some of whom are in negotiations with the IMF for further aid.

And it has increased pressure for further concessions to the world's poorest countries, where campaigners have been pressing for the IMF and World Bank to cancel their debts entirely.
World Bank boss James Wolfensohn faces demands for more debt relief
World Bank boss James Wolfensohn faces demands for more debt relief

"Many of these countries, particularly extremely poor countries, are spending more on servicing their debt, than they are on healthcare, for example," Robert Naiman, senior policy analyst at the Center for Economic Policy and Research in Washington, DC, told BBC Online.

The IMF and the World Bank are public institutions that exist to promote development and address poverty, Mr Naiman argues.

And many people regard it as absurd and obscene that countries such as Mozambique and Zambia, some of the poorest countries in the world, would be diverting resources from urgent human needs to spend on servicing debt.

The IMF and World Bank, which have approved debt-relief programmes for 22 highly-indebted countries at the end of last year, says that to increase debt relief further would jeopardise lending to other countries.

Protests muted

Last but certainly not least is the possibility of protests by anti-globalisation forces, like those seen in Quebec City last weekend, when the three-day meeting of Western Hemisphere nations was marred by fiery protests with police responding with tear gas and over 400 arrests.

Both the IMF meeting in Prague in September, and its spring meeting in Washington last April, faced mass protests from thousands of demonstrators objecting to the organisation's role in managing the world economy.

While some demonstrations are expected in Washington, meeting officials do not expect them to resemble the riots seen in Quebec City or Seattle in 1999.

Demonstrators have said they are saving their fire for the September meeting.

The World Bank says the subject of this year's meeting will be on how to reduce poverty among the poorest nations. When officials look back, however, resolving conflict may be the overriding theme.

Search BBC News Online

Advanced search options
Launch console

Terror's impact

Signs of a slowdown

Rate cuts


Key players

See also:

25 Apr 01 | Business
IMF warns of global slowdown
25 Apr 01 | Business
EU downgrades growth estimate
25 Apr 01 | Business
Japan cuts growth estimate
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories