21 April 2006

IMF chief warns high oil prices set to stay - Forbes.com

IMF chief warns high oil prices set to stay - Forbes.com: "WASHINGTON (AFX) - IMF chief Rodrigo Rato warned that record oil prices are here to stay and appealed for collective action to rectify widening imbalances in the world economy.

The International Monetary Fund managing director said weekend meetings of global financial leaders here must also address the reform of the IMF to make the Western-dominated organization more representative of emerging economies, especially in Asia.

'The impact of higher oil (prices) on the global economy has so far been moderate, but it remains a serious risk,' Rato told a news conference a day before a Group of Seven meeting, ahead of the weekend gathering of the IMF and the World Bank.

'It is likely that higher prices are going to last and that, among other things, (this) has to show all of us that we have to adjust to a situation that is going to last,' the IMF leader said.

Crude oil futures hit new peaks Thursday, above 74 usd a barrel in London and 72 usd in New York, owing to concerns about a gasoline supply crunch in the US and tensions over Iran's nuclear ambitions.

According to the latest IMF forecasts released this week, the world economy is on course to expand by a robust 4.9 pct this year.

But Rato warned of 'important risks' to that outlook arising from the record-high oil prices, global economic imbalances, rising interest rates and a potential bird flu pandemic.

He said that, for now, there were 'clear signs of a welcome rebalancing of world growth' as sluggish economies in Europe and Japan pick up their pace to leave less of a burden on the fast-expanding US.

But ahead of the weekend meetings, the IMF has stepped up warnings that the world economy is dangerously out of kilter as "

No comments: