IMF report----pomp--your strongest case is the the drop in oil and fuel but that i feel that must lock-in for a lengthy period of time to create a healing process for economy and that is not a gurantee.
But read this from the ever optimistic IMF,and be sure to get down to where they are now projecting an only 0.7% GDP growth for U.S. economy for 2002.The market is priced well above such a growth estimate.
<< World economy set for weakest show in 8 years--IMF
Reuters, 12.18.01, 9:34 AM ET
By Mark Egan
WASHINGTON (Reuters) - The economic fallout from the Sept. 11 attacks dealt a brutal blow to economic prospects in almost every corner of the world, causing the most universal slowdown in at least two decades, the IMF said Tuesday.
But despite the weakest global economic growth in eight years, the International Monetary Fund's interim World Economic Outlook predicts that a steady hand from policymakers should ensure a swift recovery.
"While there are good reasons to expect a recovery to get underway in 2002, the outlook remains highly uncertain and there is a significant possibility of a worse outcome," the IMF's new report said.
"Correspondingly, the primary challenge for policymakers is how best to support the prospects for recovery, and to limit the risks attendant on a deeper and longer downturn should that occur," the lender said.
Just 14 months after it said the global outlook was the rosiest in a decade, the lender now expects economic growth in 2001 and 2002 of 2.4 percent -- a level viewed by most economists as indicative of world recession and the weakest global growth since a 2.3 percent expansion in 1993.
The fund forecast U.S. economic growth of 0.7 percent in 2002 after a 1 percent expansion this year. The United States entered a recession in March, ending an unprecedented decade-long expansion. The IMF now sees growth in the 12-nation euro zone of 1.2 percent in 2002, down from 1.5 percent this year, the weakest growth since 1.4 percent in 1996.
"DISTURBING FEATURE"
Japan is expected to post its first post-World War Two back-to-back contractions in 2001 and 2002 of 0.4 percent and 1 percent -- an "increasingly worrying" situation."
"A particularly disturbing feature of the current slowdown is its synchronicity across nearly all regions," the report said. The lender added pointedly that Europe and Japan had failed to undertake reforms in time to take up the slack when the U.S. expansion ended in March of this year.
The IMF made its latest forecasts in an interim publication of its World Economic Outlook, which takes the pulse of economies around the world. The lender normally publishes its forecasts in the spring and fall.
But its September publication was rendered moot by the events of Sept. 11, which dealt a hammer blow to consumer confidence and crimped economic prospects almost everywhere. In November, the IMF made its first effort at incorporating the effect of the Sept. 11 aftermath into its forecasts.
The latest publication added detail to those estimates, but left most of the numbers little changed from the already sharply lower revisions made last month.
Even at its reduced expectations -- 2002 global, U.S., Japanese and euro-area growth estimates have all been cut by 1 percentage point or more since September -- the lender admits that its forecasts could still be too optimistic.
The latest WEO report examined the accuracy of its own forecasts over the years and concluded, with no trace of irony, that the possibility that its economic predictions could be wrong, "remains a source of downside risk."
SOME HOPE
The report is full of caution and cites "great uncertainty" about the world outlook, it is not entirely without optimism.
"With substantial policy stimulus in the pipeline, particularly in the United States, faster-than-expected progress in the war on terrorism in Afghanistan, and possible downside risks to oil prices, there is a possibility that recovery in 2002 could come more rapidly than presently expected," the report said.
But, in case the reader becomes too hopeful, the report quickly stresses that, "the possibility of a worse outcome remains the major policy issue at the current juncture."
"Against this background, there is a need for a coordinated and collaborative policy response by the international community. In industrial countries ... economic policies should help to sustain demand, especially given the synchronized nature of the slowdown," the report said.
Specifically, the IMF said there remains more room to ease monetary policy, particularly in Japan where there could be, "a more aggressive approach to monetary easing."
The lender said that fiscal stimulus, like that being debated currently in the United States, would be useful, "if implemented sufficiently rapidly, while demand is still weak."
In Europe, the IMF reiterated its belief that countries should be more flexible on fiscal policy, allowing governments to continue spending despite lower revenues.
The IMF's latest forecasts assume a recovery in the coming year based on a rebound in confidence and risk appetite.
But, as is always the case, the lender also considered a less palatable situation. That alternative scenario, in which neither confidence nor risk appetite rebounds in 2002, would crater prospects entirely.
Under that scenario, global growth for 2002 would come in at just 1.7 percent, the U.S. economy would shrink 0.2 percent, the euro region would grow by just 0.6 percent while Japan's contraction would be a large 2.4 percent.
Copyright 2001, Reuters News Service.>> |
