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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Bituman who wrote (23000)	9/25/2007 12:02:27 AM
From: elmatador	Respond to of 217769

'Credit crunch to hit hardest in '08' 25 Sep, 2007, 0326 hrs IST, REUTERS MADRID: Most of the impact of the global credit crunch will be felt in 2008 and the United States will be hardest hit, International Monetary Fund managing director Rodrigo Rato said on Monday. World economic growth should remain high next year but looks set to be below the levels of 2006 and 2007 and downside risks increase the longer financial markets remain in crisis, Rato told a seminar in Madrid. “Credit markets are correcting, but slowly, we aren’t at a stage of normality,” Rato said, adding that most countries should be able to cope with the financial conditions.“It has an effect on the real economy which will be felt more in 2008, with greater intensity in the United States, less in other areas,” he said. Rato saw no quick fix for the global credit crunch triggered by defaults on US subprime home loans to borrowers with poor credit histories.Financial institutions have cut inter-bank lending to limit exposure to US subprime home loans that were sold around the world via packages of asset-backed securities. Central Banks have injected liquidity to compensate for the liquidity squeeze. The IMF still sees risks to growth on the downside given the strong state of the global economy, Rato said.It was not yet clear, he said, whether the credit crisis represented a change in economic cycle or a temporary slowdown in growth. A few more months will be needed to access the full impact on banks, companies and governments, he added.“A lot will have to with the length of the crisis, the longer it lasts, the bigger impact it will have,” Rato said. The IMF has said it will cut economic growth forecasts for the United States, euro zone and other regions when it releases its latest World Economic Outlook next month. Rato said the IMF’s estimates for Spain would be cut. Spain, the euro zone’s fourth largest economy, is exposed to the credit crunch by its current account deficit which is the second largest in the world after that of the US. “International financing is getting more complicated and our external deficit needs financing,” Rato said.