The global economic growth outlook has dimmed since October as a troublesome mix of tighter credit terms and rising energy prices put central bankers in a bind, the IMF's chief economist said on Friday.
Simon Johnson said oil prices had risen more than the International Monetary Fund had projected when it released its World Economic Outlook in October, raising concerns about inflation and making it tougher to cut interest rates to address slowing growth.
"A lot has changed since then. Most of what has changed has been negative," Johnson told a small group of reporters following a conference on the health of the US economy. He noted that while third-quarter US growth was stronger than expected at 4.9 percent, a buildup of inventory would likely erode fourth-quarter growth.
On Thursday, the IMF warned that persistent turmoil in financial markets and higher oil prices had cast a darker cloud over global growth prospects for next year. The IMF plans to update its economic outlook in January.
Johnson said emerging markets remained strong, which should help the global economy weather a slowdown concentrated in the United States. Longer term, however, there were some concerns about how emerging markets would cope with massive inflows of money.
"Too much capital, too fast, too footloose" can be problematic, he said, echoing concerns raised in the October economic outlook. Worries about a US economic downturn have encouraged some investors to look elsewhere for better returns, putting pressure on the US dollar, which hit a record low against a basket of currencies earlier this week. However, Johnson said the dollar was still "on the strong side" in the medium term.