World Economic Outlook April 2005 US on notice: Cut spending, fiscal deficit.

(From Business Line)

The latest World Economic Outlook is hard-hitting in pointing out the failures in the economic policies of such superpowers as the US, Europe and Japan. Deploring the widening current account gap of the US, which has a mirror image in the current account surpluses of developing countries like China and India, the WEO prescribes that the US must reduce its massive fiscal deficit even as it cuts consumption. Difficult choices are involved, but the report pins its hopes on leaders who can focus beyond the here and now, says S. Venkitaramanan.

SPRING beckons one to Washington, along with cherry blossoms, central bankers and Finance Ministers, to contemplate the state of the world economy and debate measures to restructure it. This is the time when the World Bank and IMF hold their semi-annual meetings to discuss problems of world development.

The World Economic Outlook (WEO), incorporating the efforts of the various IMF economists - a distinguished lot, by any reckoning - is released in time for the meeting. It is, rightly, the cynosure of all eyes, spelling out as it does the IMF's forecast of economic growth for various countries, commodity prices, monetary policies and, in general, movement of the world's capital flows.

The latest WEO of April 2005 follows in the grand tradition of its predecessors, except that it is more hard-hitting in …