WASHINGTON (AFX) - The IMF's main policymaking body said the global economy remains strong despite high oil prices.
Downside risks to the growth outlook come from energy prices, 'the potential for an abrupt shift' in market conditions, a rise in protectionism and a possible avian flu pandemic, it said.
The committee endorsed proposals to increase the Fund's surveillance of the global economy, including currencies, to derail potential crises.
It also endorsed a plan to give developing nations more power within the IMF. UK Chancellor of the Exchequer Gordon Brown, chairman of the IMF committee, said the full IMF should agree to the reforms at the Fund's annual meetings in Singapore in September.
The committee said the global economic expansion is becoming geographically more broadly based, and global growth is expected to remain strong in the next couple of years.
Inflation and inflation expectations remain well contained but vigilance will be required as excess capacity diminishes, it said.
And it said more needs to be done to address global current account imbalances.
'While progress has been made, more concerted and sustained implementation -- with every country doing its part -- is needed to help reduce medium-term risks associated with the imbalances,' it said.
It said the agreed policy strategy remains valid -- increased saving in the US, structural reforms in the euro zone and Japan, along with fiscal consolidation in Japan, greater exchange rate flexibility in emerging Asia, and policies to promote efficient absorption of higher oil revenues in oil-exporting countries.
It also called for further measures to improve the supply-demand balance in oil markets over the medium term.
'The committee emphasises the importance of further upstream and downstream investment, policies to promote energy efficiency, conservation, and alternative sources of energy, reducing subsidies on oil products, and further efforts to improve the quality and transparency of oil market data,' it said.
It also emphasised the importance of an ambitious and successful outcome to the Doha round of world trade talks by the end of this year.
'The committee calls on all members to resist protectionism in both trade and foreign direct investment,' it said. steve.whitehouse@afxnews.com mw/sw/sw COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited