The International Monetary Fund was more likely to raise its world economic growth forecast from its current 4.6 percent than to lower it, IMF Managing Director Rodrigo Rato said on Monday. Earlier Rato called on the European Union and Japan to make growth-spurring structural reforms and asked the United States to cut its deficit. "An upward (growth revision) could be more likely than a downward (revision)," Rato told reporters at a conference marking the 60th anniversary of the Bretton Woods agreement which created the International Monetary Fund and World Bank. Regarding fast-growing China, Rato said: "In the next months we expect to see a moderation of Chinese growth to make it more sustainable in the medium term." Rato, who took over as IMF chief earlier this month, said the multinational body had a particularly important role in highlighting major economic challenges that the world must tackle.
"This is why, despite the controversy our advice often provokes, the IMF calls on the United States, Europe and Japan to contribute to more balanced and sustained global growth. "This means active efforts by the United States to reduce its deficit and by the European Union and Japan to promote sustained growth through structural reforms," Rato told the conference, which was organised by the IMF and the Bank of Spain. Rato did not say whether he was referring to the United States' trade or budget deficit. Rato told reporters that U.S. authorities had indicated their intention was to have a more neutral interest rate policy, which he said supported evidence that the U.S. recovery was a fact. "We don't see risks of inflation in the U.S. economy," Rato said. The United States posted a record trade deficit in March of $46.0 billion, due largely to stronger U.S. economic growth and the highest oil import prices in 21 years. It is on track for a record annual budget deficit in its fiscal 2004, which ends on September 30, even though the monthly shortfall narrowed slightly in May to $62.47 billion. The U.S. economy grew at a robust annualised rate of 4.4 percent in the first quarter. Japan expects growth of more than three percent this year as it struggles to haul itself from a prolonged downturn amid sluggish consumer spending. The 12-nation euro zone grew by 0.6 percent in the first quarter from the final three month of 2003, which equates to an annualised rate of over two percent, as economists continued to call for economic powerhouse Germany to undertake more far-reaching structural reforms.///