Signs of a worldwide economic slowdown are not indicators of a coming catastrophe, Horst Koehler, director of the International Monetary Fund, said today.
"It is clear that the strong world economic expansion of the past two years is losing momentum, due in large part to the effects of last summer's increase in oil prices and developments in the advanced industrial countries," Koehler said in a speech in Kobe, Japan. "But in our analysis, it would be an exaggeration to embark on doomsday scenarios now."
Koehler said the recent reduction in key US interest rates would help blunt the effects of an economic slowdown, adding that the US has further room to maneuver on both monetary and fiscal policy.
In Europe, tax reforms are taking effect at the right time, he said.
"But both Europe and Japan can and should do more to promote sustained growth and thereby strengthen investor confidence in the global economy," Koehler said. "The key for this lies in a deepening and acceleration of structural reforms, with special attention to corporate and financial sector restructuring in Japan, and to labor market and pension reform in Europe."
Koehler also called on the international community to help boost investor confidence by embarking on a new round of talks on reducing trade barriers.
AFP