The US economic recovery is not as strong as expected but it is Europe and Japan that need to do more to boost world economic growth, according to the International Monetary Fund.

The IMF's view is very strongly that we would like to see measures taken to see... Europe and Japan growing somewhat more rapidly

Anne Krueger IMF

The IMF's first deputy managing director Anne Krueger made the comments in India during a meeting of finance ministers and central bankers from the Group of 20 rich and poor countries.

Ms Krueger said the US upswing was "not quite as strong as people had expected".

But she reserved her sternest words of warning for Europe and Japan.

Stimulating Germany

The prospects for Europe were "not that good" and economic forecasts were falling almost monthly "as numbers come in", she said.

"The IMF's view is very strongly that we would like to see measures taken to see other legs on the stool, namely Europe and Japan, growing somewhat more rapidly because that would obviously be good for everybody, including the United States," she said.

They... forget some of the smaller industrialised countries, such as Canada and Australia, who are doing well

Anne Krueger IMF

Ms Krueger did not elaborate on what those measures should be.

Many economists, and US officials, have urged the European Central Bank to cut interest rates, with a view to stimulating economic growth in Germany - Europe's largest economy, which is struggling to stay out of recession.

Japan's economic problems centre around how to reverse deflation, and encourage consumer spending, and dealing with bad debts in the banking system.

Ms Krueger's assessment came after US Treasury Secretary Paul O' Neill, also in India for the G-20 meeting, said on Friday that annual US growth could reach 4% in mid-2003.

Bright spots

Other economies have been performing relatively well, especially smaller industrialised nations including Canada and Australia and emerging markets such as China, India and Russia.

"I keep telling people the world economy is not as bad as they think," said Ms Krueger.

"They look at Japan, the US and Europe and forget some of the smaller industrialised countries, such as Canada and Australia, who are doing well."

She praised Brazil for sticking to the IMF's prescribed policies but said Argentina had not done enough and there was no deal on future aid.

"If Brazil maintains the macroeconomic framework in the programme, Brazil looks to be in fine shape," she said.

India, the G-20 host, needed to restart its privatisation programme and cut its fiscal deficit, she said.