Wednesday, April 22, 2009

IMF: World Economy in Severe Recession

Pretty sobering statement out today from the IMF, but nothing really surprising.

The International Monetary Fund on Wednesday slashed growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession.

In offering new economic projections, the IMF said government measures to battle recession should be sustained, if not increased, in 2010, warning that premature withdrawal of stimulus could set back a recovery.
As expected, the U.S. is at the center of this, and China is the "best of the worst" so to speak.

The IMF said the United States remains at the epicenter of the crisis, and
it said it now expected the U.S. economy to contract 2.8 percent this year. It said while there were signs the U.S. recession might be easing, a recovery was unlikely to take hold until next year, which would leave 2010 gross domestic product flat.

In Asia, where countries are being harder hit by a drop in global trade than by troubles in the financial sector, the IMF said Japan's recession would be far deeper than previously thought, while China's economy will grow at a much slower pace.
This isn't totally valuable information, but worth noting. Those who belive the recession is over need to realize there is more trouble ahead. The IMF typically is more along the Keynesian viewpoint and is in favor of government stimulus programs to pull the economy out of recession. Naturally the current administration/fed aligns well with this line of thought.