In September, the International Monetary Fund (IMF) published its second biannual World Economic Outlook, which predicted that world GDP would grow 4.3% in 2005 as well as 2006. Although the forecast for 2006 was revised downward 0.1 percent point (pp) from the April issue, the forecast for 2005 was unchanged. The September Outlook estimates that 2005 GDP growth in the U.S. will be reduced only 0.1 pp, as the result of hurricane Katrina, but also lowered its 2006 forecast by 0.3 pp because of higher inflation, rising interest rates, and falling consumer confidence. The euro area continues to disappoint; its already lackluster GDP growth was revised downward in the September Outlook. The Chinese economic expansion continues unabated, with robust growth predicted through 2005 and 2006.
Suggested citation: "International Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 05-11, pp. 08-09, 11.01.2005.