IMF: Global economy on track for growth

The global economy is still on track for healthy growth despite the adverse impact on U.S. business prospects of a housing slump and skittishness about risky mortgages, the head of the
International Monetary Fund said Friday.

IMF chief Rodrigo de Rato said the international lending institution expects worldwide economic growth for all of this year to clock in at close to 5 percent.

"This would be the strongest five-year span for the global economy since the late 1960s," he said in prepared remarks to the University of Pennsylvania's Wharton School in Philadelphia.

Even though economic growth in the United States_ the world's largest economy_ is slowing, business growth in other parts of the world is moving ahead, he said.

"In the Euro area growth momentum looks solid," de Rato said. "Japan's economy seems to have regained its footing. China and India continue to be engines of growth."

The recent turbulence in financial markets in the United States and abroad reflected a "reappraisal of risk" as investors contemplated, among other things, the odds of an economic slowdown in the United States, problems in the U.S. mortgage market and the risks in currency trading, involving the Japanese yen, de Rato said.

Those were some of the factors behind the Feb. 27 swoon in stock markets around the world. The Dow Jones industrials that day alone suffered a gut-wrenching 416-point plunge.

De Rato said investor concern is not in itself a bad thing.

"The most dangerous time in financial markets is when no one believes that they can lose," he said. "Recent movements in markets, despite their costs, will at least help to reduce any such complacency."

Still, he said, troubles in the United States involving lenders who made mortgages to people with blemished credit histories bears close watching and could have implicatons for the global economy.

Delinquencies and foreclosures for such risky mortgages are spiking in the United States. That has battered lenders of these so-called subprime mortgages, rattled investors and ignited criticism of regulators from lawmakers on Capitol Hill.