IMF Mussa Sees 2001 World Growth 3.5%, 4% In 2002

By BridgeNews International Monetary Fund (IMF) economic counselor and director of the research department Michael Mussa says he sees global economic growth slowing from last year's 5.0% to 3.5%, but then picking up to 4.0% in 2002. Mussa also said U.S. growth in 2001 is set to stand at 1.5-2.0%, while that of the euro zone, which looks like an area of strength, is seen at just under 3.0%. The IMF chief economist also says the U.S. will "skirt the edge of recession" this year but that any recession "would be nominal but not real." The chief economist points out that "global trade expanded rapidly in 2000 in the double-digit range but will be in the single-digit range in 2001." Mussa went on to say he sees an additional 100-basis-point rate easing by the U.S. Federal Reserve in the first half of this year, in addition to the 100-basis-point rate cut already announced this year. The IMF chief economist, who is set to step down from his post at the end of his term on June 29, also says he sees the European Central Bank easing rates by 50 basis points, in two moves, by the middle of this year. He also says he expects the Bank of England to ease its monetary policy in the next six months, but did not specify how much this easing could entail. Regarding Japan, Mussa says there were still serious problems in the financial sector, exacerbated by the slowdown in growth. "Japan won't borrow from the IMF because they have huge reserves and resources of their own," he says. "They have limited room for maneuver in monetary and fiscal policy but have some room to ease interest rates further."

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