IMF discovers hot water: inequality rises alongside wealth

"WASHINGTON, Oct 17 (IPS) - The International Monetary Fund's latest assessment of the world economy might resonate with developing countries, critics of economic globalisation, and proponents of tighter financial regulation alike.

China, India, Russia and other developing countries will propel the world economy in the year ahead, the IMF said Wednesday in its latest World Economic Outlook report.

In contrast, advanced economies -- hobbled by financial turmoil that originated in poorly regulated recesses of their capital markets -- will continue to lose steam.

The fund's acknowledgment that inequality rose alongside wealth and could imperil future progress also might chime with anti-poverty activists.

"Technological advances have contributed the most to the recent rise in inequality, but increased financial globalisation -- and foreign direct investment in particular -- has also played a role," the IMF said.

However, it added: "Contrary to popular belief, increased trade globalisation is actually associated with a decline in inequality." "