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Wednesday, April 21, 1999 Published at 11:43 GMT 12:43 UK

Business: The Economy

IMF: No global recession

The IMF's headquarters in Washington

A year or two of slow global growth, but no dramatic economic downturn - that is the forecast of the International Monetary Fund in its twice-yearly World Economic Outlook.

BBC News' Patrick O'Connell reports on the IMF's forecast
Global growth this year is expected to be around 2-3%, slightly less than during 1998 and down nearly 2% from 1997.

The IMF economists do not predict an outright global recession, but forcast that slow growth rates are here to stay for a couple more years.

That would make it difficult for the countries most affected by the economic crisis in East Asia and other developing countries to recover from the doldrums and fight unemployment and poverty.

The IMF thinks that the Brazilian crisis will continue to be a problem for Latin America and its assessment of the situation in Russia is gloomy.

Russian troubles

[ image: Russian pensioners are among the losers of their country's economic crisis]
Russian pensioners are among the losers of their country's economic crisis
The fund's experts say Russia's economic troubles reflect serious and persistent shortcomings in the country's policies. Widespread corruption and a culture of non-payment are harming the economy, with the government itself repeatedly failing to meet its obligations to public sector employees, pensioners and suppliers.

The report says that the Russian economy will continue to shrink this year and that the government's financial problems are exacerbated by falling oil prices - one of Moscow's top revenue earners.

The weakness of most commodity prices, like oil and copper, is holding back many developing countries. Low prices translate into low revenues, hitting both government budgets and workers in those industries.

Kosovo crisis

The refugee crisis and military action in the Balkans will harm economic development there, according to the IMF. The Former Yugoslav Republic of Macedonia will particularly suffer, as Yugoslavia is one of its main trading partners.

Together with Albania, its economy will also have a heavy burden dealing with the influx of refugees.

The report says that Romania and Bulgaria will suffer from disruption to transport links and increased caution by foreign investors. Croatia is expected to be hurt by a drop in tourism.

Downbeat Japan

The fund's analysis of Japan is another element in the downbeat assessment for the world. In many previous reports in the 1990's the IMF did forecast an imminent Japanese recovery.

This time the IMF is more cautious. In its report it forecasts that the crisis in Japan probably will not get any worse after this year - unless the world economy takes an unexpected turn for the worse.

The possibility that Japan might continue to decline is one of the big risks for the world economy.

Euro praise and warning

The European Union is one of the regions hampered by slow growth. However, the IMF describes the introduction of the single currency, the euro, as successful.

[ image: Unemployment and poor growth is damaging labour relations in the eurozone]
Unemployment and poor growth is damaging labour relations in the eurozone
The fund's experts say that the prospect of monetary union may well have shielded Europe from international financial turmoil during the last two years.

But the report warns that there are formidable challenges ahead for the euro countries and the European Central Bank.

The IMF warns that arrival of the euro and the loss of independent national interest rate policies makes it all the more urgent that European labour markets are made more flexible to address the high and persistent levels of unemployment in several of the eurozone countries.

US shares threat

Once again the IMF repeats its warning of wider international consequences if there were to be a sharp fall in the US stockmarket from its current high levels.

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