IMF Predicts

11th August 09 - IMF predicts

Hard on the heels of the International Monetary Fund clocking up the debts of the UK economy (see yesterday’s entry), their latest report is both upbeat and over the pond.

The annual report of the IMF on the US economy says that the severe contraction "seems to be ending" but recovery will be slow. Coinciding with this report came the release by the US Commerce Department of the 2009 second quarter GDP figures. These figures showed that the rate of economic slowdown in America was decreasing. The contraction for the three months to June 09 was at an annualised rate of 1%. While still falling, the rate was slowing markedly and this was attributed to two main aspects. First, increased consumer spending and secondly the federal fiscal stimulus packaged amounting to $787bn.

The measure of improvement can be gauged by the fact that the first quarter’s decline in annualised GDP has been revised downward to 6.4%. This represented the biggest set-back in growth since early 1982. To compound the historical comparative, US GDP has fallen for four consecutive quarters, the first time this has occurred since 1947 when records began.

The IMF report was completed before the GDP figures were published and this makes its statement the more important, "As a result of their increasingly strong and comprehensive policy measures, the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened."

We could add that Americans are saving harder than they ever have. Looks like the economic score today is USA 1, UK 0.

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