IMF says currency movements supporting economic growth … – Reuters

WASHINGTON (Reuters) – Recent changes in exchange rates should help the global economy, boosting notably Japan and Europe, with a growing divergence in growth paths of the largest economies in the world, said Tuesday the International Monetary Fund.

The IMF maintained its forecast for global growth unchanged because the expected rebound in the euro zone and India would be offset by lower prospects in other key emerging markets such as Russia and Brazil.

But the agency warned that the economic recovery remains “moderate and uneven”, beset by growing uncertainty and multiple risks such as geopolitical tensions and financial volatility.

In its World Economic Outlook, the Washington-based agency maintained its forecast for global growth this year by 3.5 percent. For 2016, the IMF expects global GDP to expand by 3.8 percent, from 3.7 percent it forecast in January.

However, the overall figures mask a growing divergence among major economies, partly due to the different impact of exchange rate fluctuations and prices of Lower oil.

It is expected that the strong rise in the dollar against euro and yen is a major issue in the meeting of major world economic officials in Washington this week.

The exchange rate movements have also left exposed to some emerging economies.

The IMF said monetary policies are causing most of exchange rate movements, while the US Federal Reserve prepares to raise rates while the European Central Bank and the Bank of Japan kept its monetary stimulus.

The currency effects should encourage the global GDP, supporting demand in economies still problems in the euro zone and Japan, the IMF said, raising its forecasts for both regions. Continued …