The world economy is set to grow by 3 per cent this year, reflecting a near global recovery after the recent crisis, but serious challenges still lie ahead, according to the International Monetary Fund.
Releasing its bi-annual World Economic Outlook report, the IMF said that the slowdown in global growth from 4.2 per cent in 1997 to 2.5 per cent last year, will prove to be the mildest the world has seen in the past 30 years.
But the pattern of the expected expansion in the world economy is regarded as worryingly uneven, particularly among the major industrialised countries.
It also said the pace of the inevitable slowdown in the United States was crucial to the prospects for the rest of the world.
The IMF believes that the US should see a 'soft landing' but warns that this is not guaranteed, and needs to be combined with a solid recovery in Europe as well as Japan.
It recommends that among the policy initiatives that could be used to ensure a smoother pick-up in global demand are higher interest rates in the US and a drop in interest rates in Japan, potentially through the controversial injection of liquidity by the Bank of Japan.
'Many problems and risks therefore remain,' the IMF said.
