Global Economy to Slow More

The combination of higher energy prices and weaker growth prospects in advanced economies could dampen the outlook also for emerging markets. Nonetheless, despite these risks, the most likely outcome is a continued global expansion.

However, the persistence of the imbalances undermines confidence that the global growth expansion can be sustained, says IMF First Deputy Managing Director John Lipsky.

The imbalances are:

i. New risks threaten global growth

ii. Global imbalances still challenging

iii. Currency moves reflect new uncertainties

Rising oil prices, financial market turmoil, and a sliding dollar have grabbed the headlines in recent months.

Underlying these developments, however, is the emergence of record external payments imbalances and the associated capital flows.

Speaking with the IMF Survey magazine, he argues that it is more urgent than ever that the major players—China, the Euro area, Japan, Saudi Arabia, and the United States—follow through on promised policy plans that were announced last April as part of the IMF's Multilateral Consultation On Global Imbalances. -IMF