IMF: Gulf Crisis Not Likely To Cause a World Recession: Appraisal Assumes Maior Oil F
The Persian Gulf oil crisis will weaken the global economy over the next year, boosting unemployment and inflation rates slightly, but it is not likely to tip the world into a recession, the International Monetary Fund said yesterday.</br></br>This optimistic appraisal, issued prior to the annual meeting of the World Bank and IMF here next week, is based on the assumption that the price of oilÛÓat $33.18 yesterday-will come down to $26 a barrel in the last quarter of this year, then decline to $21 by the fourth quarter of 1991.</br></br>By the end of next year, the IMF said, the price of oil is likely to be back where it was before the crisis and then continue to be level in real terms, that is, adjusted for inflation. The net damage, according to the IMFÛªs annual World Economic Outlook, might be a half-point annual loss In the real growth rates of major Industrial countries and a quarter- to half-point rise in the inflation Indexes.</br></br>The agency said that Third World countries, taken as a whole, will actually benefit slightly from the oil price increase because there are several large oil-exporting countries among them. But a senior official warned that the IMF might seek to borrow from those Third World countries enjoying that profit and lend the money at below-market rates to others hard hit by the rise in prices.</br></br>Countries feeling the impact of higher oil should allow the price increase to be passed on to business and consumers and make no attempt to. ease monetary policy, the agency said, to avoid inflation.