The world economy has maintained rapid growth in 2007 but will face greater risks in the coming year, according to analysis of the latest World Economic Outlook from the International Monetary Fund (IMF).

    IMF: "RELATIVELY STRONG GLOBAL GROWTH PERFORMANCE WILL CONTINUE"

    In 2007, the robust economic development of the newly-emerged markets, especially in Asia, has largely offset the slowdown in economic growth of the United States and its economically-related countries stemming from the U.S. subprime mortgage crisis and subsequent world financial market unrest.

    "The expansion is projected to remain above the long-term trend, not withstanding recent financial market turbulence, with emerging markets and developing countries leading the way," the IMF said.

    Global economic growth has been faster, broader and more stable since 2004 than at any time in the previous 30 years. Between 2004 and 2006, global economic growth remained at a stable 3.25 percent. Improved monetary and fiscal policies have helped underpin growth and stability, the IMF report said.

    The world economy is expected to expand by 4.8 percent next year after a 5.2-percent pace projected for 2007, thanks to generally sound fundamentals and the strong performance of the emerging market economies, the IMF said in its report.

    According to IMF's predictions, the economic growth of Asia's developing countries, including China and India, will reach an impressive 9.8 and 8.8 percent in 2007 and 2008 respectively, with China's growth rates reaching 11.5 percent and 10 percent in the two years, and India's 8.9 and 8.4 percent respectively. Some sub-Sahara African countries have also embraced their fastest developing period in more than 40 years.

    Emerging market economies, like China, India and Russia, have become "a source of stability in the global economy," said RodrigoDe Rato, chairman of the Executive Board and Managing Director of the IMF. "These countries have weathered the financial turbulence relatively well, partly because global growth has been strong, and domestic macroeconomic police-making has improved, though vigilance is still needed," said the report.

    The global economy is increasingly reliant on those newly-emerged economies, with 50 percent of the global economic growth in 2007 coming from the above-mentioned three countries.

    IMF: "YET A GLOBAL ECONOMIC SLOWDOWN IS LIKELY TO OCCUR AMID GREATERRISKS"

    However, the financial turbulence worldwide and surging oil prices have cast a shadow on world economic development, increasing its future risks.

    "Last year we met at what I called a time of opportunity, but today we meet at a time of uncertainty," said Rato at the IMF and World Bank annual meetings in October. Now people are widely concerned about whether the world economy has reached a "crossroads" or not, he said.

    The greatest threat to the world economy is the financial market unrest stemming from the high-risk U.S. subprime mortgage sector, where loans were given to home buyers with poor credit histories. Large numbers of banks and lenders have been affected, and world credit has become volatile.

    The world's leading economy, the United States, has been heavily hit by the subprime mortgage crisis. The IMF readjusted the prediction of U.S. economic growth of this year and next year to 1.9 percent, 1 percent lower than last year's 2.9 percent, and 0.9 percent lower than its original prediction of the U.S. performance in 2008.

    In countries like Canada, European Union countries and Japan, where the knock-on effect from the U.S. is likely to be largest, and in countries where the impact of continuing financial market turmoil is likely to be more acute, the economic slowdown is inevitable in the coming year, the report warned.

    "Risks to the outlook lie firmly on the downside, centering around the concern that financial market strains could continue and trigger a more pronounced global slowdown," the IMF said.

    "Thus, the immediate task for policy-makers is to restore more normal financial market conditions and safeguard the continued expansion of activity."

    Besides the financial problem, some other phenomena appear to be more surprising and alarming, including high oil prices and sharp food price increases in emerging markets and developing countries, which would stimulate inflation.

    Other risks include the impact on emerging markets of strong capital inflow, and continued large global imbalances. At the same time, longer-term issues such as population aging, increasing resistance to globalization, and global warming are also a source of concern, the IMF pointed out.

    Looking back and ahead, people should have reason to be confident in the global economy, yet should remain vigilant. Along with globalization, the global economy is intertwined with opportunities and risks.

    The key in the years ahead, the IMF suggested, is to make sure that emerging markets and developing countries can continue to grow rapidly and without major disruptions. Trade liberalization should be continued, to allow capital to flow to more productive opportunities in poorer countries. Most importantly, the benefits of growth should be widely shared across all countries and by as many people as possible within countries.

    To tackle shocks such as the U.S. mortgage crisis and the world financial turbulence of this year, the IMF will work with economic departments of various countries to anticipate further serious shocks, both negative and positive, and to work harder to make sure that the policies and institutions in place can withstand these shocks, the IMF said.