World economic growth strong, inflation subdued, says IMF

World economic growth was strong, and inflation remained subdued. The expansion continued to be led mainly by the United States and China, and other Asian emerging market economies, but economic performance improved in almost every region.

Sub-Saharan Africa, in particular, posted its highest growth in a decade in 2004 - an encouraging boost to the poverty reduction that the region so urgently needs.

These favourable developments reflected, to a significant extent, improvements in policies in recent years in a number of member countries improvements actively supported in many cases by the IMF, the IMF annual report said.

Nevertheless, there remained significant risks to the global expansion - including chronic payment imbalances and rising oil prices and countries continued to face challenges in the pursuit of reforms needed to secure sustained, strong growth with high levels of employment.

Much of the IMF's work last year, especially through its surveillance over the economies of all its member countries, and over the global economy and monetary system, involved advice on, and advocacy of, policies to address these risks and challenges.

The fund also again provided financial support for policy programs in many developing and emerging market countries - programs aimed at enhancing sustainable growth as well as resolving balance of payments difficulties.

Looking ahead, the continuing favourable economic outlook should provide countries with further opportunities, which they should seize, to strengthen their economies.

For low-income countries, in particular, the prospect of enhanced financial support by the international community has improved the chances that the Millennium Development Goals (MDGs) will be achieved, but only if the countries themselves take the bold policy actions needed to foster stronger growth and poverty reduction.

At the international level, an especially high priority now, including for faster progress in reducing poverty, is that all countries meet their commitments to achieve an ambitious liberalisation of trade under the Doha Round.

The IMF also remained busy in FY 2005 with reforms of its own policies and operations. We conducted periodic reviews of some major operational policies, including surveillance and conditionality in IMF supported programs.

Such reviews of particular operations form part of the Fund's culture of learning and change. But it is crucial also that we occasionally step back to take a fresh look at our institution, the report said.