http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aH0PqEhXuZiQ
Nov. 6 (Bloomberg) -- The International Monetary Fund predicted the first simultaneous recession in the U.S., Japan and euro region in the post-World War II era and called for more interest-rate cuts and fiscal stimulus. ``Markets have entered a vicious cycle of asset de- leveraging, price declines and investor redemptions,'' the IMF said in an update to its World Economic Outlook report, released in Washington today. ``Global action to support financial markets and provide further fiscal stimulus and monetary easing can help limit the decline in world growth.'' The revisions reflect a further choking-off of credit to companies and businesses in the past month. The Bank of England today reduced its key rate by the most since 1992, the European Central Bank lowered its benchmark by 50 basis points to 3.25 percent and Swiss policy makers cut their main lending rate by the same margin to 2 percent. ``We're basically saying that advanced countries will be in recession in 2009,'' IMF chief economist Olivier Blanchard said at a press conference. U.S. gross domestic product will contract 0.7 percent, Japan's will shrink 0.2 percent and the euro area's 0.5 percent in 2009, the IMF said today in Washington. The fund last month foresaw 0.1 percent U.S. growth, with expansions of 0.5 percent in Japan and 0.2 percent in the euro zone. Downward Revisions Global growth will be 2.2 percent next year, down from 3.7 percent this year, the IMF said. The fund said in its semiannual World Economic Outlook report on Oct. 7 that world GDP would rise 3 percent in 2009. As recently as July, IMF economists expected a 3.9 percent expansion. The IMF report showed the U.K. economy will be the worst performer among the G-7, which also includes the U.S., Japan, Germany, France, Italy and Canada. Gross domestic product in the U.K. next year will recede 1.3 percent, the IMF said, a steeper decline than 0.1 percent decline forecast in October. The IMF has said as recently as April that a growth rate of 3 percent or less is ``equivalent to a global recession,'' although Blanchard today resisted applying that definition to the current outlook. At the press briefing, IMF spokesman Bill Murray indicated that the fund's definition of a worldwide contraction has evolved, saying now ``we're not defining a global recession as something as 3 percent or less.'' Growth in the U.S. ``will suffer as households respond to depreciating real and financial assets and tightening financial conditions,'' the IMF said. In Japan, ``growth from net exports is expected to decline.'' The 15-nation euro region will be ``hard hit'' by the slowdown, the fund said. Lower Interest Rates The IMF also warned today of growing risks of deflationary conditions in advanced economies. ``There is a clear need for additional macroeconomic stimulus relative to what has been announced thus far,'' the fund said. ``Room to ease monetary policy should be exploited, especially now that inflation concerns have moderated.'' As the credit crunch widens, the reversal in major developed countries is spreading to poorer nations, increasing demand for IMF loans. In emerging and developing countries, GDP in 2009 will increase 5.1 percent, less than the 6.1 percent expansion the fund predicted in October. China's growth will measure 8.5 percent next year, weaker than the 9.3 percent forecast a month ago. Since the fund produced its forecast in October, the outlook for developing countries has deteriorated as investors shunned their currencies and bonds, sending borrowing costs climbing. Demand for the fund's emergency loans -- which had slumped in recent years amid a boom in emerging markets -- has surged, with Hungary, Ukraine, Belarus and Iceland all asking for financial help from the IMF. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
