The world economy is pulling out of a prolonged slump that sent unemployment in some countries to the highest levels in decades, the International Monetary Fund reports this week.
However, the IMF cautioned that the United States and other economic powers must guard against rising inflation and curb deficit spending to ensure healthy expansion through the decade.Signs of a turnaround in Western Europe and Japan "suggest that the long and unusually severe downturn may finally have ended," the IMF said in its latest World Economic Outlook report.
"For the world economy, prospects look brighter now than they have for the last three or four years," said Michael Mussa, head of research for the Washington-based agency.
The report was released as the IMF and its sister agency, the World Bank, prepared for annual meetings of finance ministers of 179 member nations. The two institutions lend billions of dollars each year to developing countries.
The economic outlook is far more optimistic than in recent years, when Germany and other European countries were gripped by recession. Jobless rates in Europe shot up to their highest levels since World War II. In the 12-nation European Union, about 18 million people were out of work during the recession.
The IMF predicted the global economy would expand by a moderate 3.1 percent this year, rising to 3.6 percent next year. That pace, after adjustment for inflation, would double 1990-93 rates of growth.
It projected the American economy would grow 3.7 percent this year and a more restrained 2.5 percent in 1995.
Germany's expansion will likely be 2.3 percent this year and 2.8 percent next year, while the Japanese economy should grow 0.9 percent this year and 2.5 percent in 1995.
Despite the upbeat forecast, the IMF cautioned authorities in the United States and other leading industrialized nations to be on the lookout for inflationary pressures and work harder to pare budget deficits.