THE WORLD ECONOMY TURNS

Financial markets have calmed; Asia is showing signs of improvement; and the US economy continues to speed away. The International Monetary Fund, in its latest assessment of the world economy, believes that despite Latin America's troubles, these positive developments are the beginnings of a global economic revival. But the road to recovery may not be a smooth one. The IMF forecasts that world output growth this year will be much the same as last year, at 2.3 per cent. But as the recovery gathers speed, next year's growth should reach 3.4 per cent, equal to the 1980s average. What could interrupt this process? The IMF identifies two risks. The first is further problems in the emerging markets. Confidence has been returning, but there are still plenty of troublespots which could send investors running scared. The Chinese economy is slowing, and fears of a devaluation have not gone away; Brazil remains vulnerable; and Russia continues its plunge into economic chaos.