The International Monetary Fund (IMF) has said the rapid decline in the dollar was being exaggerated, and that the United States remained an engine for medium and long-term growth in the world economy.
"There is some exaggeration in the world about the slide of the dollar," IMF managing director Mr Horst Kohler said yesterday.
"On the one hand, it's clear, with this huge current account deficit, \ the drop of the dollar should not be a surprise. It is in a way even wanted in order to solve" this imbalance.
"On the other hand, I just feel it's premature to write off the dollar. It seems to me that still the US ... has the potential for strong growth. In my view, the US economy will remain in the medium and long run a locomotive, an engine, for growth in the global economy."
Mr Kohler added that it was imperative Europe and Japan accelerate their process of reform in the medium term.
"Global growth is presently weak, but I believe that the recovery will strengthen in the months ahead.
"The advanced countries, that is the US, Europe and Japan, have a particular responsibility to boost growth," Mr Kohler said, praising the "political will" of the leaders from the G8 and major developing and emerging market countries to work together in addressing the world's problems.
He also noted that some concerns over the cost of crude oil had not materialised, the strongly improved balance sheets of many US companies, high cash liquidity and the unexploited potential in technology.
However, "it will not be a recovery which brings us back to the strongest possible growth rate that we have seen, for instance, in the second half of the 1990s," Mr Kohler said. - (AFP)
