The world economy is emerging from a three-year slump with unexpected vigor this year and next, but rising interest rates could pose risks, the IMF said on Wednesday.
World economic growth will bolt from 3.9 percent last year to 4.6 percent this year -- the fastest since 2000 -- and 4.4 percent next year, the IMF said in its semi-annual World Economic Outlook issued ahead of a gathering of World Bank and IMF policymakers.
It was the fund's brightest assessment since the world economy was shocked by the Sept. 11 attacks and then cowed by wars in Afghan-istan and Iraq.
The global economy "seems to be by and large in the springtime of recovery," IMF chief economist Raghuram Rajan said.
Like the fable about the ant and the grasshopper, the fund urges countries to tackle their problems while the good economic conditions are present, Rajan said.
The fund's list of tasks is daunting: the US should take cut its budget deficit, Europe should take steps on structural reforms to open up its labor markets, Japan should take further reform its banking and corporate sectors and China should move towards eventually ending its dollar peg.
"The world has emerged from the winter of recession. The message of this outlook is that instead of dancing the spring and summer away, we should make provisions for the future. Being the ant is boring, but it is prudent economics," Rajan said.
Strength in the US and Chinese economies was hauling the rest of the world out of the slow years, and investment was kicking in as a major engine of activity, the fund report said.
"With global trade rising sharply, financial markets buoyant and the US economy rebounding, the balance of risks has significantly improved," the fund said.
A breakdown of the forecasts showed: US growth will jump from 3.1 percent last year to 4.6 percent this year and 3.9 percent next year.
Eurozone growth will rise from a tepid 0.4 percent last year to 1.7 percent this year and 2.3 percent next year.
Japanese growth will climb 2.7 percent to 3.4 percent this year before sliding back to 1.9 percent next year. Emerging Asia will roar, with growth unchanged from last year at 7.2 percent this year, and then 6.8 percent next year. In China, growth will ease from 9.1 percent last year to 8.5 percent this year and 8 percent next year.
As the world swings around, it faces new threats, the fund said.
"As recent events in Madrid and elsewhere underscore, geopolitical uncertainties remain an important -- if difficult to quantify -- risk; and further oil price volatility remains a concern," the IMF said.
It repeated its warning that the massive US budget and current account deficits -- each about half a trillion dollars this year -- and surpluses in Asia were a "serious concern."
It urged the US to provide a "credible plan" to restore budgetary balance. Interest rates, now near rock bottom and bound to rise, presented an emerging menace.
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