IN old western movies, there was often a scene where one cowboy turned to another and said: "It's quiet out there, too quiet" - just before the Indians swept over the hill.

That is the way the world economy feels to some policy makers as they prepare for the start of tomorrow's annual meeting of the International Monetary Fund and World Bank in Washington.

Inflation in industrial countries is low. Economic growth seems to be picking up throughout much of the world. Currency markets are stable, and speculators have turned more sober.

Even if the US Federal Reserve raises interest rates a notch tomorrow, as some analysts expect, the outlook for the world economy next year still looks good, IMF officials said.

"This is the point in time that we dig out the old adage - complacency must be avoided," Mr Stanley Fischer, first deputy managing director of the International Monetary Fund, said.

He told reporters that something inevitably would go wrong. The problem is that nobody knows what it will be.

Mr Fischer singled out Europe as a potential trouble spot as it struggles to launch European Monetary Union in 1999 against a backdrop of slow growth and skyhigh unemployment.

"If there would be difficulties, they could be associated with the possibility that the (faster) growth we see for Europe does not happen," the senior IMF official said.

Princeton University professor, Mr Peter Kenen, said Europe's inability to deal with the unemployment problem raised concern about the continent's long term political stability.

"I have been amazed that their political systems have been thus far reasonably invulnerable to violent political reaction to high unemployment," he said.

With the world economy seemingly on course for a good year and financial markets looking stable, policy makers will turn their attention to less earth shattering but nevertheless important issues relating to the IMF and the World Bank.

Among those up for discussion a multi billion dollar proposal to provide multilateral debt relief to the world's poorest nations.

The IMF pledged last week to find the money to participate, and the World Bank is already on board.

But if the programme is to work, industrial nations will need to expand the debt relief they already provide to poor nations. And money will also need to be found so that the African Development Bank can take part.

"I don't think it will be a thunder and lightning meeting," one international monetary official said.

"But when the markets are so stable and the winds are blowing so gently, one really has to wonder what is going to upset it."