Mr Rodrigo Rato, the new managing director of the International Monetary Fund (IMF), called yesterday for a new energy initiative to help counter the surge in the price of crude oil.
He said that the climb in the price of oil was largely the result of strong demand and the world needed "energy policies over the medium to long term to compensate for the rise".
Oil prices fell yesterday as rising fuel supplies in the United States soothed fears of a summer fuel crunch and countered concern over violence in Middle Eastern producers Iraq and Saudi Arabia.
Estimates that producer group OPEC is pumping at its fastest rate in three-and-a-half years after boosting output by 800,000 barrels per day spurred some selling too, traders said.
Despite the recent surges in oil prices over the past several weeks, Mr Rato said the IMF was more likely to raise its 4.6 per cent forecast for world economic growth than to cut it. "Clearly the world economy is recovering," Mr Rato told a conference in Madrid on the 60th anniversary of the Bretton Woods agreement.
"Right now, even taking into account that we are revising upwards our forecasts for the average oil price for the year by about $5 \, we do not see risks of cutting the world growth target that we set in the spring," he said.
An upward revision looked more likely, he added.
In April, the IMF raised its prediction for world economic growth from 4.1 per cent to 4.6 per cent and will be revising its estimate once again in the autumn.
Mr Rato repeated his call to the euro zone and Japan that they needed to accelerate structural reforms to their economies in order to promote balanced global growth.
The lopsided nature of the global economy was emphasised yesterday by a further widening of the US trade deficit to a record $48.3 billion (€40.1 billion) in April.
The IMF has long been warning that imbalances in global demand represent a threat to growth in the long run.
Mr Rato added that he expected to see a moderation of Chinese economic growth in the coming months, a trend that many economists fear will further widen the US trade imbalance.
