Washington - The International Monetary Fund (IMF) on Monday improved its forecasts for the US economy for the first time since a deep economic crisis struck last year, citing indicators that the worst may be over. In its latest review of the United States, the IMF said the world's largest economy will shrink 2.5 per cent this year, revising slightly its April prediction of a 2.8-per-cent contraction for 2009.
For 2010, the economy will grow 0.75 per cent. In April, the IMF forecast zero growth in the United States in 2010. The US financial sector, whose near collapse in October helped plunge the world into recession, had "noticeably improved."
"We see some good signs, but there are still sizable challenges ahead," said John Lipsky, the IMF's deputy managing director.
Lipsky said the IMF expects the US recession - its longest since the 1930s - to end some time in the coming quarters, but a "solid" recovery will not take hold until mid-2010. The predictions were roughly in line with what is expected by US economists.
The global lender warned there were still risks that the situation could worsen, and urged the US to begin tackling long-term fiscal deficits that could hurt investors' confidence in the US recovery.
Unemployment will peak near 10 per cent in the second half of next year - it is currently at 9.2 per cent - while inflation is expected to remain low through next year.
The US has been mired in recession since December 2007, but the downturn became much worse in October as the bankruptcy of Lehman Brothers pushed the country's financial sector to the brink of collapse.
The US central bank, the Federal Reserve, has lowered interest rates to 0 per cent for the first time in its history to help pull the US out of its massive economic downturn.
For 2010, the economy will grow 0.75 per cent. In April, the IMF forecast zero growth in the United States in 2010. The US financial sector, whose near collapse in October helped plunge the world into recession, had "noticeably improved."
"We see some good signs, but there are still sizable challenges ahead," said John Lipsky, the IMF's deputy managing director.
Lipsky said the IMF expects the US recession - its longest since the 1930s - to end some time in the coming quarters, but a "solid" recovery will not take hold until mid-2010. The predictions were roughly in line with what is expected by US economists.
The global lender warned there were still risks that the situation could worsen, and urged the US to begin tackling long-term fiscal deficits that could hurt investors' confidence in the US recovery.
Unemployment will peak near 10 per cent in the second half of next year - it is currently at 9.2 per cent - while inflation is expected to remain low through next year.
The US has been mired in recession since December 2007, but the downturn became much worse in October as the bankruptcy of Lehman Brothers pushed the country's financial sector to the brink of collapse.
The US central bank, the Federal Reserve, has lowered interest rates to 0 per cent for the first time in its history to help pull the US out of its massive economic downturn.
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