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US growth will slow to a crawl - IMF
The world economy will slow sharply this year, according to an International Monetary Fund (IMF) forecast, with the US sliding into a recession amid housing, credit and financial slumps.
- AP
- Published: 17:36 April 9, 2008
Washington: The world economy will slow sharply this year, according to an International Monetary Fund (IMF) forecast, with the US sliding into a recession amid housing, credit and financial slumps.
The IMF, in a World Economic Outlook, released yesterday, slashed growth projections for the US - the epicentre of the woes - and the global economy as a whole.
Economic growth in the US is expected to slow to a crawl of just 0.5 per cent this year, which would mark the worst pace in 17 years, when the country last suffered through a recession, the IMF said. The US won't fare much better next year; the IMF projected the US economy will grow by a feeble 0.6 per cent in 2009.
"The US economy will tip into a mild recession in 2008 as the result of mutually reinforcing cycles in the housing and financial markets," the IMF said.
Many private economists and members of the US public believe the country has already fallen into its first recession since 2001. For the first time, Federal Reserve Chairman Ben Bernanke acknowledged last week that a recession was possible.
An increasing number of analysts think the US economy, which grew by 2.2 per cent in 2007, started shrinking in the first three months of this year and is still contracting.
Under one rough rule, if the economy contracts for six straight months it is considered to be in a recession. A panel of experts at the National Bureau of Economic Research that determines when US recessions begin and end, however, uses a broader definition, taking into account income, employment and other barometers.
To limit the damage, the Federal Reserve has been slashing interest rates since last September and has taken a number of extraordinary measures to avert a financial meltdown, which would have dire consequences for the US.
"The financial market crisis that erupted in Aug-ust 2007 has developed into the largest financial shock since the Great Depression," the IMF declared.
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