December 03, 2008

Recession reports- US economy at virtual standstill- IMF

According to Mr IMF Simon Johnson chief of IMF, US economy has come to a virtual standstill and will remain weak in coming quarters due to deeper problems in housing and credit markets, but avoided calling it a recession.

Mr Johnson speaking ahead of the April 9th 2008 release of the IMF's World Economic Outlook said that "Notwithstanding the strong response from US policymakers, tighter financial conditions, higher energy prices, softer labor markets and the weak housing market all conspire to weigh heavily on the US economy in the near term.” He added that economic growth in Europe would also slow this year, perhaps with some lag, because of the United States' weak performance.

Mr Johnson said deeper and more protracted strains in financial markets posed the biggest threat to the world economy, with economic growth in major emerging economies also likely to weaken, although it should stay above trend. He cautioned that "An intensification of problems in the US housing and credit markets could further slow the US economy and weigh on the arc of recovery.”

According to leaked copies of the IMF's upcoming global forecast, the IMF now expects the global economy to grow by 3.7% in 2008, below an earlier forecast of 4.1%.