Washington, At a time when economic data indicate that the US economy is more flexible than expected, and in light of the International Monetary Fund (IMF) this week enhancing its expectations for the growth of this economy this year and next year, the Wall Street Journal (WSJ) believes that the strength of the economy in the US negatively affects the growth of other countries.
The American newspaper said in a report that the surprising strength in the US economy poses a threat to the rest of the world, portending higher interest rates for longer and a stronger dollar that will weigh on other countries growth.
The IMF this week boosted its growth projections for the US economy, now forecasting 2.1% growth this year and 1.5% next year, a sign of "a softer landing than earlier expected." The newspaper pointed out that the IMF's expectations for much of the rest of the world grew dimmer. Chinas economy has been suffering under a downturn in the property market, weak exports and lower consumer demand, which has weighed on Germany.
The WSJ believes that the US economy might be heading for a soft landing. But the rest of the world could be in for a jolt.
The newspaper explained that economies abroad face additional inflation risks from the rise in the dollar and higher oil prices. When the dollar rises, it becomes more expensive for other countries to buy foreign goods and commodities, most of which are priced in dollars.
Global officials fear rising interest rates and a stronger dollar also could usher in a new wave of debt distress across the developing world, the WSJ said.
The strength of the dollar is already making it more expensive for emerging-market countries to pay back dollar-denominated debts, the newspaper added.
Development officials warn rising debt costs are threatening vulnerable countries ability to spend on climate-change projects. According to the IMF, nearly 60% of low-income countries are in, or at risk of, debt distress, a classification that signifies a country cant meet its debt obligations.
The WSJ said persistence of inflation continues to surprise global central banks and investors, indicating that the IMF boosted its inflation forecast for next year to 5.8%, up from its previous forecast of 5.2%. (MORE)
Source: Qatar News Agency