COLLEEN MCEDWARDS, WORLD NEWS: Asia markets are dropping at this hour, reflecting the beating that Wall Street took on Wednesday. Meanwhile, in Washington, the International Monetary Fund issued its first economic outlook report of the new year. CNN's Bob Beard has that.</s>BOB BEARD, CNN CORRESPONDENT (voice-over): The International Monetary Fund worries the world economy is overheating, threatened by, quote, "very high equity prices worldwide, including in the United States."</s>MICHAEL MUSSA, CHIEF ECONOMIST, IMF: The stock market, in addition to another of other indicators, is suggesting growing imbalances in the U.S. economy that make it appropriate for monetary policy here to move to a somewhat tighter stance.</s>BEARD: Though it worries about a record trade deficit and a possible economic downturn, the IMF believes the most likely scenario for the U.S. economy is a soft landing, thanks to gradual taps on the brake by the Federal Reserve and a projected Fed funds rate of 7 percent by year's end, a full point higher than today. Worldwide, the IMF outlook is its strongest in more than a decade. Global GDP projected to grow 4.25 percent this year, possibly higher, tapering to 3.9 percent in 2001.</s>CLYDE PRESTOWITZ, ECONOMIC STRATEGY INSTITUTE: Given the agony that we went through in '97 and '98 with first the Asian crisis, then the Russian and the Brazilian crisis, the rapidity of this bounce-back is really amazing.</s>BEARD: The IMF notes policy reforms have put most Asian economies on the mend, led by South Korea. It believes Japan's economy is now in recovery but concedes that is fragile. In Europe, the IMF calls the recovery on track, noting that even Russia's growth is strong due to higher oil prices. The fund also projects a broadening recovery this year in Latin America. (on camera): But the IMF cautions that such projections are just that and subject to adjustment. Last year, the IMF predicted a global recession. Instead, it was the first year of a surprising comeback. Bob Beard, CNN Financial News, Washington.
IMF Issues World Economic Outlook