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To: Chuzzlewit who wrote (86419)	12/21/1998 1:16:00 PM
From: Mohan Marette	Respond to of 176387

<World Economy> Threat of a world recession eases. Paul: I don't know about you but I 'hate' bureaucrats and their predictions but anyway here is something I found which could be deemed as interesting. ===================================== IMF: World Recession Threat Eases By MARTIN CRUTSINGER AP Economics Writer WASHINGTON (AP)--The financial firestorm that began last year in Asia and hit Russia this summer still poses severe threats, but the dangers of a worldwide recession have eased in recent weeks, the International Monetary Fund said today. The IMF credited interest rate cuts in the United States and elsewhere with helping to stabilize a situation that in August and September was threatening to spiral out of control after Russia's default on billions of dollars of foreign loans buffetted investors from New York to Buenos Aires. The 182-nation lending agency stressed in an updated ''World Economic Outlook'' issued today that even with markets now stabilized, the global economy faced numerous risks in 1999 and it would be ''premature to consider the difficulties to be over.'' The financial turmoil that began in Thailand in 1997, then spread to Russia this year and has threatened countries in Latin America, has already pushed 40 percent of economies into a downturn. That left Federal Reserve Chairman Alan Greenspan worrying in September how long the United States could remain ''an oasis of prosperity'' in the face of such overseas turbulence. The Fed began in September a series of three interest rate cuts over seven weeks aimed at boosting domestic demand to offset the loss of overseas markets for American manufacturers and farmers. The new IMF report said, ''While the danger of a worldwide recession does seem to have diminished, the supply of funds to most emerging market economies is still sharply reduced and conditions in financial markets remain fragile,'' the IMF said. The IMF, in fact, trimmed its growth forecast for 1999, projecting that world output of goods and services would rise by just 2.2 percent. That compares to an assessment just two months ago that the economy would expand bu 2.5 percent in 1999. The IMF's forecast for 1998 was revised up slightly to 2.2 percent, compared to 2 percent in October, based in part on a stronger-than-expected showing in the United States, where consumers have kept the U.S. economy rolling despite the Asian headwinds. For the United States, the IMF's updated forecast predicted growth of 3.6 percent this year, slightly better than the 3.5 percent forecast in October, but a foresaw a sharp slowdown in 1999 with growth of just 1.8 percent, 0.2 percentage points lower than the October forecast. Japan, the world's second largest economy, is struggling to emerge from its worst recession in 50 years. The IMF was encouraged with recent policy actions to deal with failing banks, but it still predicted the Japanese economy would shrink by 2.8 percent this year and another 0.5 percent in 1999. The 1999 outlook is a full percentage point lower than October. ''Japan's economic outlook remains particularly uncertain and questions remain about the adequacy and implementation of recent initiatives to turn the economy around,'' the IMF said. The Clinton administration has argued that other hard-hit Asian countries have no hope of mounting sustained recoveries unless Japan takes more forceful action to deal with its own problems and serve as an engine of growth for the region. In addition to the threats posed by Japan sliding deeper into recession, the IMF also expressed worries that developing countries will have increasing trouble attracting the foreign capital they need as investors look for less risky opportunities elsewhere. Also listed as threats were the possibility that the U.S. stock market, which has climbed to new highs after its August swoon, could be caught in another downdraft that could prompt American consumers to pull back on their spending. The IMF has assembled more than $100 billion in emergency rescue loans for Thailand, Indonesia, South Korea, Russia and last month, Brazil. But the agency itself has come under attack from critics who have charged that its brand of belt-tightening austerity measures have made the economic recessions in the crisis countries worse and failed to halt the spread of the market turmoil to more nations. IMF officials did not respond directly to the criticism in the outlook report, but the agency's economists did note that in South Korea, Thailand and more recently Indonesia, the economic reform packages have ''achieved considerable success in re-establishing financial stability.'' AP-NY-12-21-98 1123EST