UNITED NATIONS: The global economy will grow by 3.5 per cent this year as the recovery that got off the ground in the last half of 2003 strengthens and broadens in the coming months, UN forecasters said on Wednesday.

But the global outlook remains clouded by large international imbalances, particularly the US deficit in trade and investment, the UN Department of Economic and Social Affairs said in its latest forecast.

These imbalances, which run the risk of stoking inflation and disrupting investment flows, will "not automatically be corrected by the global recovery; to the contrary, the imbalances are expected to widen further in 2004,"the report predicted.

But the US Government should keep spending for now, rather than quickly crack down on its soaring budget deficits, in order to continue to stimulate world economic growth, said Jose Antonio Ocampo, UN Undersecretary-General for Economic and Social Affairs.

"The stimulus is essential"for the short term, although the United States should work in the medium term to correct the imbalances as Washington now depends heavily on the rest of the world to finance these deficits, he told a news conference.

In a report issued last June, the UN forecasting unit predicted the world economy would grow by just over 3 per cent in 2004 after expanding at a 2.5-per cent rate in 2003 and a tepid 1.7 per cent in 2002.

The report said the 2003 recovery was better than most forecasters had expected, particularly in the United States and many Asian nations.

(China Daily 01/16/2004 page12)