Few signs of rebound from U.S. housing mess, says IMF
Province
WASHINGTON — The global economic outlook is increasingly grim, with the United States mired in a recession from a housing meltdown whose effects are still spreading, the IMF said yesterday.
Global expansion is set to slow to 3.7 per cent in 2008 amid an unfolding crisis that began in the United States, the International Monetary Fund said in its semiannual World Economic Outlook report.
The growth estimate is a half-point lower than the January WEO update, it noted.
The U.S. economy, the world’s biggest, is likely in a “mild recession” and will stagnate through much of 2009 as housing prices slide further and credit conditions remain difficult.
For the world economy, there is a 25- per-cent chance of dropping below three-per-cent growth in 2008 and 2009, which, according to the IMF, would be the equivalent of a global recession.
“Moreover, growth is projected to remain broadly unchanged in 2009,” with growth in the advanced economies likely to fall “well below potential,” the 185-nation institution said.
The U.S. is poised to grow a paltry 0.5 per cent in 2008, the IMF said, despite a multibillion-dollar government stimulus package.
U.S. growth for 2009 will improve to 0.6 per cent, a “modest” recovery expected as financial institutions clean up their balance sheets.
But Treasury Under Secretary for International Affairs David McCormick called the IMF much too downbeat in its outlook.
The IMF also said growth in western Europe is projected to slow “well below” potential due to financial strains, trade spillovers and housing downturns in some countries. It paints much the same picture for Japan, the world’s second-largest economy.
China and India, the new engines of global growth, will also feel the slowdown, the IMF said.
© The Vancouver Province 2008
