US to bounce back in H2 ’09, LatAm steady - IMF

22 October 2008 19:13  [Source: ICIS news]

WASHINGTON (ICIS news)--The multinational effort to revive the global financial system likely will succeed, and the US economy should see a recovery in the second half next year, the International Monetary Fund (IMF) said on Wednesday.

 

The fund, the private sector lending arm of the World Bank, also said it expects Latin American nations will weather the global downturn to see trend growth in 2009.

 

In its latest economic outlook for the Western Hemisphere, the IMF noted that “the world economy continues to be buffeted by the burgeoning downdraft of the financial crisis and volatile commodity prices”.

 

The fund said it expects global growth will fall to its slowest pace since the 2001-2002 recession.  “However, authorities around the world have taken further, massive and increasingly coordinated corrective actions,” the fund said.

 

The IMF said its outlook “anticipates that these [measures] will be successful in stabilising financial conditions”.

 

“However, it will take time under any rescue plan to restore the proper functioning of credit markets,” the fund said.  That means that the restorative effect of the rescue efforts will not be seen immediately, at least not in the US.

 

“For the United States, our baseline projection is that recovery will begin in the second half of 2009 and will be more gradual than previous recoveries,” the fund analysis said.

 

Economic growth in the US and other advanced economies will be close to zero at least until the middle of next year, the IMF said.

 

“For Latin America and the Caribbean (LAC), the ongoing global turmoil represents a confluence of negative shocks: the freeze in global credit markets, weaker external demand and lower commodity prices,” the outlook said.

 

That combination of three major economic shocks could create near-recessionary conditions for Latin America, the fund said. “But the region is not at that point, and our central scenario points to growth of around 3% next year, close to the average for emerging market countries.”

 

“The LAC region is expected to deal with the current global shocks better than in previous crises,” the fund said, because many countries in Latin America and the Caribbean have seen substantial improvements in their economic fundamentals over the last decade.

 

The full IMF regional economic outlook for the Western Hemisphere is available on the fund’s Web site.

 

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By: Joe Kamalick
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