> December 21, 1997 The Toronto Star
>
>IMF warns money crisis will spread
>
>Forecast shows global economic slowdown in
>1998
>
>WASHINGTON (CP) - The financial firestorm
>raging through Asia will leave no country
>untouched in 1998. Around the world,
>economic growth will slow and unemployment
>will rise, especially in nations at the
>centre of the crisis.
>
>That's the view of the International
>Monetary Fund, which is releasing its most
>extensive assessment so far of the
>currency crisis that has forced the
>lending agency to assemble
>multibillion-dollar bailout packages for
>Thailand, Indonesia and South Korea.
>
>Because of the rapidly deteriorating
>situation, the IMF yesterday updated its
>World Economic Outlook, originally
>released in October, with new economic
>projections for 1998.
>
>The IMF now projects the global economy in
>1998 will grow at its slowest pace in five
>years, an increase of just 3.5 per cent.
>The forecast represents a 0.8
>percentage-point reduction from two months
>ago, when the IMF had projected worldwide
>economic growth at 4.3 per cent.
>
>The IMF said there is no reason to be
>overly pessimistic and that ``the threat
>to global growth from the present crisis
>is reasonably limited.''
>
>Still, it warned the risk of the Asian
>trouble spreading to other countries had
>grown and that there was no way of knowing
>whether the world had yet seen the worst.
>
>``The balance of risks is a little on the
>downside,'' IMF chief economist Michael
>Mussa said at a news conference to present
>the report.
>
>While noting that growth in North America
>and Europe looked ``well sustained in the
>period ahead,'' the IMF warned: ``A sharp
>slowdown in economic growth is an
>unavoidable consequence of the type of
>crisis affecting a number of the Asian
>economies.''
>
>Admitting that it originally had misjudged
>the extent of the turmoil, the IMF
>appealed to troubled Asian nations to take
>urgent measures to reform their fiscal
>systems, keep monetary policy tight and
>overhaul weak financial sectors.
>
>The lending agency warned that a further
>slowdown in the already sluggish Japanese
>economy posed the ``key risk'' to advanced
>economies elsewhere in the world.
>
>In the gloomiest section of its report,
>the IMF predicted the Japanese economy
>would grow by only 1.1 per cent in 1998
>compared with 1.0 per cent this year and
>only half what had been forecast in
>October.
>
>Europe, less dependent on Asian export
>markets, will see growth reduced just 0.1
>percentage point from October's estimate
>to 2.7 per cent.
>
>Economic growth for Canada now is forecast
>at 3.2 per cent compared with an estimated
>3.7 per cent this year and off 0.3 of a
>percentage point from the October
>estimate.
>
>For the United States, the IMF forecast
>economic growth of 2.4 per cent next year,
>down from an expected 3.8 per cent.
>
