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[Via Communist Internet... http://www.egroups.com/group/Communist-Internet ] [Subscribe: [EMAIL PROTECTED] ] . . ----- Original Message ----- From: secr <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Sunday, December 23, 2001 6:22 PM Subject: [mobilize-globally] IMF warns of worldwide recession--or `worse' - ------ Forwarded Message From: <[EMAIL PROTECTED]> Reply-To: [EMAIL PROTECTED] Date: Sun, 23 Dec 2001 09:20:02 +0200 To: <[EMAIL PROTECTED]> Subject: IMF warns of worldwide recession--or `worse' - ---------- From: [EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] Date: Sat, 22 Dec 2001 14:58:06 PST To: [EMAIL PROTECTED] Subject: [R-G] IMF warns of worldwide recession--or `worse' - The Chicago Tribune December 19, 2001 IMF warns of worldwide recession--or `worse' By William Neikirk Washington Bureau WASHINGTON -- The International Monetary Fund predicted Tuesday that the global economy will sink dangerously close to a recession in 2002 and said "there is a significant possibility of a worse outcome." The international lending agency revised its economic forecasts sharply downward in the wake of the Sept. 11 terrorist attacks, which it said had damaged consumer and business confidence around the world. The IMF's gloomier outlook raised the specter of the first synchronized global recession since 1975, which many private economists believe is a virtual certainty with Japan and the U.S. in recession and Europe sliding toward one. A synchronized recession is difficult to escape. Usually, one region facing a downturn depends on others to pull it back to prosperity. For example, strong growth in the U.S. helped Asia out of its financial crisis in 1998. But the IMF's report, plus interviews with private economists, make clear that no country or region will rebound sufficiently in 2002 to serve as an engine for growth. The IMF predicted only a 0.7 percent growth rate in the U.S. and 1.3 percent in Europe next year, while Japan's economy was projected to decline by 1 percent. The institution, known as the lender of last resort to countries in financial trouble, forecast world economic growth of 2.4 percent in 2002, down 1.1 percentage points from its pre-Sept. 11 outlook. Economists say global growth of less than 2 percent qualifies as a world recession. Even at that, Robert Aliber, economics professor at the University of Chicago, questioned whether the IMF's outlook was too upbeat. "It's hard to see where the positive growth is coming from," he said. Economist Donald Straszheim, a California consultant, and Gary Hufbauer, an economist at the Institute for International Economics in Washington, also said the IMF seemed to be too optimistic. Hufbauer speculated the agency shied away from predicting a world recession "for political reasons. I think they thought it would be a self-fulfilling prophecy." U.S. recovery predicted Many economists believe the U.S. recession will abate in 2002, with a recovery expected sometime between spring and fall. "I don't think this will be a rapid recovery," Straszheim said. "Just like 1990-91, the talk will be about a jobless recovery. ... We aren't going to be a strong engine with a relatively slow and sluggish economy." Kathleen Stephansen, international economist at Credit Suisse First Boston, added: "It's going to be more difficult for the U.S. to fulfill that role of locomotive to growth. The U.S. won't have the typical rebound of consumer demand as in the past." Nor will business investment serve as catalyst for growth as it did in the 1990s, she said. The IMF said in its outlook that the attacks caused a "sharp deterioration in confidence across the globe" and worsened the ability of some "emerging" markets to finance their debts, a reference to Argentina. "As a result, prospects for global recovery have been set back significantly," it said. The most worrisome part of the report was its emphasis on the risks for sharper economic downturn. "The possibility of a worse outcome remains the major policy issue at the current juncture," the report said. It cited such risks as a lingering effect on consumer confidence due to the terrorist attacks, the dampening impact of consumer indebtedness, and a continuing overcapacity of businesses to produce. More monetary easing to lower interest rates in the U.S. and other countries may be necessary, the IMF said, and an economic stimulus package in America "could be helpful if implemented rapidly." Tax cuts that Congress approved last June and additional spending since the Sept. 11 attacks could add $375 billion in extra fiscal stimulus to the U.S. economy over the next three years, IMF economists said. The IMF forecast saw world recovery arising from several factors: Lower interest rates in the U.S. and other major industrial countries, lower oil prices and inflation, a shrinking of a glut of inventories caused by business overinvestment in the 1990s, and improved fiscal conditions of many governments that once were in deep deficit. Global rebound in 2003? Many analysts believe the world will pull out of the downturn together just as it went into it simultaneously. But that means it might be 2003 before the rebound gathers much strength and spreads globally. "I anticipate a relatively subdued U.S. economy until the fourth quarter of 2002," said John Vail, chief strategist for the global derivatives division of Fuji Securities in Chicago. The IMF also forecast similar timing. Chief economist Kenneth Rogoff predicted the U.S. recovery would begin in the second half of 2002. The IMF said that as the recovery shows itself next year, "global growth for 2003 as a whole would be expected to bounce back sharply." The simultaneous worldwide downturn will make it harder for Japan to reform its deeply troubled banking system and may delay economic reforms in Europe, the IMF said. Except in Japan, where falling prices have caused consumers to delay purchases and business to invest, the IMF did not dwell on the threat of deflation. William Wilson, economist at Ernst & Young in Chicago, said he is concerned that the worldwide slowdown also will have a significant negative impact on U.S. exports. In 2001, he said, exports will decline for the first time since 1982. "That is ominous. Over the past decade, they have accounted for one third of U.S. economic growth." _______________________________________________ Rad-Green mailing list [EMAIL PROTECTED] To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/rad-green ------ End of Forwarded Message To unsubscribe from this group, send an email to: [EMAIL PROTECTED] Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/ ==^================================================================ This email was sent to: archive@jab.org EASY UNSUBSCRIBE click here: http://topica.com/u/?a84x2u.a9WB2D Or send an email to: [EMAIL PROTECTED] T O P I C A -- Register now to manage your mail! http://www.topica.com/partner/tag02/register ==^================================================================
