IMF plays down sharemarket falls as APEC finance meet opens

COOLUM, Australia, Aug 2, 2007 (AFP) – The IMF played down recent sharemarket turmoil and said it would not lower its global economic outlook Thursday as a meeting of Asia Pacific finance ministers opened in Australia. International Monetary Fund (IMF) deputy managing director John Lipsky also said interest rates may need to rise in some countries to keep inflation under control.

Commenting on sharemarket volatility caused by concerns about the US sub-prime mortage market, Lipsky said the IMF had predicted months ago that a correction in credit markets was possible.

He said the turmoil reflected a market that was becoming more risk averse.

“Market discipline, when it arrives, is almost inevitably uncertain in terms of timing, somewhat uneven in terms of impact and to the outside observer inevitably appears a bit messy,” Lipsky said.

“But in the broader sense it tends to be effective … it has not led us to think that we need to rethink our broader outlook,” he told reporters at the meeting of Asia Pacific Economic Cooperation (APEC) finance ministers.

Lipsky said the IMF stood by a forecast released last week that the world economy would grow 5.2 percent in 2007 and 2008.

He said some la