| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
U.S. recession risk at 15% - IMF
WASHINGTON (Reuters) -- The chances of the United States economy falling back into recession have dropped to just 15 percent, the International Monetary Fund said Thursday in a report suggesting the economy can ride out current weakness. In excerpts from its latest World Economic Outlook, the IMF said recent economic data suggested the current lackluster U.S. economic performance could be over. Citing its own Corporate Vulnerability Index and other leading economic indicators, the IMF said the probability of recession rose to 53 percent just before the 2001 recession and has since been dropping. "Recently, the recession probability has fallen below 15 percent, as macroeconomic vulnerabilities associated with corporate balance sheets have fallen, reflecting both declines in both corporate borrowing and debt service burdens," the IMF report said. "In the past, a sharp fall in the recession probability to a level well below 50 percent has generally coincided with the end of the downturn," the report said. The IMF will release its full report, with estimates for global and country-by-country growth, next week at the Washington-based lender's northern spring meetings. IMF Managing Director Horst Koehler said last month a global recession could no longer be ruled out should a long war in Iraq push oil prices high and hurt consumer confidence. Sources told Reuters in late March the IMF would cut its global forecast for growth in 2003 to around 3.0 percent from 3.7 percent forecast in September. Housing riskThe report cautioned that an important risk to the global picture was the housing market, particularly in Britain where prices have posted huge gains since 1996. Although the risks of a renewed U.S. recession may have receded, the IMF said there was little sign the economy is poised to surge. The lender said companies on both sides of the Atlantic would have to further cut their debts before a truly strong economic expansion will take place. "Given that a rebound in fixed investment has been a key ingredient of rapid and sustainable recoveries, the process of deleveraging may have to advance somewhat further before a robust recovery is in the offing," it added. Indeed, IMF Chief Economist Kenneth Rogoff said highly leveraged corporate balance sheets had been a significant drag on economic growth. "In Europe, the stifling effect on investment from weak corporate balance sheets may have been as much as 2.5 to 3 percent of GDP (gross domestic product) in 2002 and remains significant," Rogoff told reporters on a conference call. "In the United States, the comparable amount is about 1 percent of GDP for 2002." Housing remains a question mark to the IMF outlook. U.K. housing prices have shot up about 70 percent in real terms since the last housing price trough in 1996, while prices in the Netherlands and Ireland have risen even further. The rise in U.S. home prices is less spectacular, up 27 percent since 1996 excluding the impact of inflation, but still ranks as the largest boom in the American housing market. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
|
