OTTAWA - The world economy is showing signs of resilience in the face of slowing activity in the United States and Europe, says the Conference Board.
The global economy is forecast to grow 2.8 per cent this year, pulled back by weakness in the United States and Europe.
The think-thank says Latin America and Asia will continue advancing robustly with growth rates of 4.4 per cent and 4.7 per cent respectively.
China will be particularly strong this year with a 10 per cent growth rate, although that is down from 11.3 per cent last year, Wednesday's report said.
"Developing countries, especially those in Latin America and the Asia-Pacific region, have sustained their strong growth rates in part through trade diversification away from dependence on the struggling U.S economy,'' said Kip Beckman, the board's principal research associate.
But the Conference Board warns that inflation, propelled by rising food and fuel prices, is posing a serious risk worldwide.
It notes that because of economic fragility, some central bankers are reluctant to raise interest rates to combat price increases.
In a separate forecast, CIBC predicts inflation in the United States will hit six per cent for the first time since 1990. And the CIBC report says the Federal Reserve Board will have no choice but to raise short-term interest rates by two percentage points.
The Conference Board said American interest rates currently remain low because of fear that higher borrowing costs would do more damage to the fragile housing market. Higher interest rates would also put upward pressure on exchange rates and make exports less competitive.
The Bank of Canada recently moved off its rate-cutting bias, citing inflation that it says will peak at 4.3 per cent during the first three months of 2009.
The central bank has estimated Canadian growth will average one per cent this year and 2.3 per cent next year.
