IMF Chief: Global Economy Threats Easing

WASHINGTON -- Threats to the global economy's good health have eased as once-surging energy prices have calmed down and the United States seems to be weathering the housing slump well, the head of the International Monetary Fund said Tuesday.

IMF chief Rodrigo de Rato said "a soft landing now seems more assured" for the United States _ the world's largest economy.

Economic growth in the United States slowed considerably throughout last year, mostly reflecting the drag on the economy from the real-estate bust. Lower energy prices, however, have helped to cushion some of that fallout on both businesses and consumers, de Rato observed.

Ill effects from slower growth in the United States infecting other countries' economies "have so far at least been minimal," de Rato said, in a mostly upbeat assessment about the global economy's outlook.

Global economic growth this year will approach 5 percent, a strong performance, he said. The IMF estimated that the worldwide economy grew by 5.1 percent last year.

"Downside risks to this benign global economic environment seem now less than a few months ago," de Rato said in a briefing with reporters.

Declining oil prices have eased concerns about dampening worldwide growth on the one hand and worsening inflation on the other, he said. Moreover, "there are now welcome signs that the U.S. housing correction may be reaching a turning point," de Rato said.

Still, de Rato said it was too early to declare that the worst of the housing slump may be past for the U.S. economy.

In other matters, de Rato once again repeated the IMF's interest in seeing China press ahead on a more flexible currency policy.

That's of keen interest to the United States, which blames Beijing's currency practices for contributing to the United States' bloated trade deficit with China as well as the loss of U.S. factory jobs.

Against this backdrop, de Rato worried that "risks from protectionist sentiment seem to be on the rise" and he continued to call for the global community to work together to reduce lopsided trade and investment patterns that are a potential risk to the world's long-run economic stability.

De Rato also said the IMF would soon be getting another member: Montenegro, a country _ slightly smaller than Connecticut _ located in Southeastern Europe between the Adriatic Sea and Serbia. That would bring the total number of IMF member countries to 185.

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