MercoPress. South Atlantic News Agency

IMF lowers global growth forecast because of oil

The International Monetary Fund warns that the surge in oil prices has become a serious risk for the global economy, reports the German daily Handesblatt quoting the coming IMF World Economic Outlook.

Basically the report says that "dangers to the world economy have increased", with insufficient oil refining capacity over the years playing "a major role in the supply bottlenecks".

The IMF outlook will also increase its forecast for future oil prices and mentions an average barrel price of 51 US dollars for 2005, a significant increase over its second quarter projection of 46,5 US dollars. Regarding 2006, the IMF report also anticipates an average barrel price of 53 US dollars, which is also higher than the originally forecasted 43,75 US dollars.

Accoridng to Handesblatt the global economy growth estimate for 2005 remains at 4,3%, and 4,4% in 2006, although budget and current account deficits in the United States remain as important risks.

But Germany apparently will give a surprise since it's now forecasted to expand 1% in 2005, compared to the original 0,8% of the second quarter IMF report. But IMF cuts Germany's growth estimate for 2006 from 1,9 to 1,3% given a weak domestic demand.

Other forecasts quoted by Handelblatt: US, 2005, 3,6% and 2006, 3,6%; Euro zone, 2005, 1,3% and 2006, 2%, compared to the previous forecast, 1,6% and 2,3%.