WASHINGTON: Higher oil prices are not expected to harm the global economy, the International Monetary Fund's (IMF) new managing director Rodrigo Rato said.
According to Rato, there is no chance the IMF would cut its forecast for 2004 global growth from its current estimate of 4.6%, despite the fact that oil prices are US$5 above the average used by the fund's economists to project the growth rate for this year.
We don't see the risk that it (the growth forecast) will be revised downward, Rato said at his first press conference yesterday here after assuming office on Monday.
He added that the negative impact of the higher oil prices was being offset by stronger demand.
The demand in the world economy will more than compensate, he said.
Rato said he would visit China and Japan next week to review the Asian markets and their impact on the global economy.
The IMF saw no signs of resource inflation in the US economy, he said, and therefore he expected the Federal Reserve to raise short-term interest rates gradually.
Rato's toughest near-term test will be coping with the aftermath of Argentina's debt crisis, according to analysts.
Argentina has offered to pay creditors holding US$100bil of defaulted bonds about 25 cents per dollar of defaulted debt. AFX-Asia
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