The global economy should turn in an energetic performance this year, even though its biggest player, the United States, is expected to experience its weakest growth in five years, according to a new International Monetary Fund (IMF) forecast.

"By and large things look very good," said Simon Johnson, the fund's top economist.

In its latest World Economic Outlook, released Wednesday, the IMF is projecting the world economy to grow by 4.9 percent this year and next. While that would be a moderation from last year's 5.4 percent advance, it would still represent a remarkably healthy showing, analysts say.

The US economy is expected to grow by 2.2 percent this year, which would be the slowest since 2002, when it was recovering from a recession. Last year, the US economy managed to expand by 3.3 percent, a two-year high, even as it coped with a painful housing slump.

The reason for the lower projection: "The housing market downturn in the United States has, if anything, been deeper than projected," the IMF said.

The US economy should pick up some speed next year, however, and expand by 2.8 percent as the drag from the housing slump eases, the IMF said. That would mark an improved performance, analysts say.

So far, the US housing slump has had little impact on economic activity in the rest of the world. "Overall, the baseline view remains that difficulties in the housing sector will not have major spillovers," the IMF said.

If the problems in housing were to spread throughout the US economy, forcing consumers and businesses to cut back severely on spending and investment, that could spell trouble, the IMF warned. "Such a development could imply a deeper and more prolonged slowdown or even a recession in the United States, with potential spillovers to other countries," the IMF report stated.

Another risk to the global economy is that oil prices will spike again, which could rekindle fears about inflation, the IMF said. Last summer, oil prices surged past US$77 a barrel in the US.

Robust growth elsewhere

World economic growth is expected to remain solid even in the face of much slower activity in the US as other countries pick up the slack.

China, is expected to log blistering growth of 10 percent this year and 9.5 percent next year, according to the IMF's forecast. The country's economy expanded by 10.7 percent last year.

India, which grew by 9.2 percent last year, will moderate to 8.4 percent this year. Next year, it will expand by 7.8 percent.

In Europe, the IMF is projecting Germany to expand by 1.8 percent this year, an improvement from a previous projection of 1.3 percent growth. Germany is expected to see growth of 1.9 percent next year.

Britain should see economic growth of 2.9 percent this year, also better than the IMF previously thought. Next year, growth in the country should slow a tad and clock in at 2.7 percent.

Russia is expected to see economic activity increase by 6.4 percent this year, compared with 6.7 percent last year. In 2008, Russia's economy is expected to grow by 5.9 percent.

Japan, meanwhile, continues to recover from a decade-long stagnation. It is expected to post economic growth of 2.3 percent this year, up a notch from 2.2 percent last year. Growth should fall back to 1.9 percent next year.

Against this mostly positive worldwide economic backdrop, the IMF urged policymakers to confront longer-term challenges, including aging populations and rising resistance to increasing globalization.

(China Daily via agencies April 12, 2007)