IMF economist says to cut global growth outlook
December 16, 2007
IMF economist says to cut global growth outlook
Sat Dec 15, 2007 10:18am EST
ZURICH, Dec 15 (Reuters) - The International Monetary Fund will lower its growth outlook as the continued credit crisis hurts the U.S. and European economies, while global imbalances also weigh on growth, its top economist was quoted as saying.
"Given this background, the numbers will indeed be weaker than in our latest World Economic Outlook," IMF Chief Economist Simon Johnson told Switzerland's Finanz und Wirtschaft business newspaper in an interview on Saturday.
The IMF already lowered the forecasts from its July World Economic Outlook in October.
But the numbers would in all likelihood have to be revised down again at the Fund's next update in January, when it gives a preview of its April official forecasts. "We will not be able to stick to 1.9 percent 2008 Gross Domestic Product growth for the United States, nor to 2.1 percent for Europe," Johnson said.
"By how much we will have to lower our GDP forecasts, we will know in January," he said.
The Fund already warned in November the global economic growth outlook had dimmed, because of a troublesome mix of tigher credit terms and rising energy prices.
The U.S. dollar remained overvalued despite its continued drop since 2002, Johnson said, which could be an obstacle for the U.S. trade deficit to gradually diminish.
Too high oil prices and the undervalued Chinese currency boosting exports in U.S. trading partners formed the other side of the trade imbalance equation, Johnson said.
The Chinese yuan -- which the West has often said is held articially low by the government -- was the biggest problem and oil prices should ideally come down to between $60 and $70 a barrel, from prices above $90 now.
"Oil prices are having an impact on short-term inflation expectations in particular, and could lead the U.S. central bank to be less inclined to lower interest rates further," he said.
The IMF did not have a foreign exchange target in mind for the greenback, but it should fall even further despite its persistent decline, to help diminish the U.S. trade deficit and the chance of disorderly currency movements. (Reporting by Douwe Miedema)
© Reuters 2007 All rights reserved
Sat Dec 15, 2007 10:18am EST
ZURICH, Dec 15 (Reuters) - The International Monetary Fund will lower its growth outlook as the continued credit crisis hurts the U.S. and European economies, while global imbalances also weigh on growth, its top economist was quoted as saying.
"Given this background, the numbers will indeed be weaker than in our latest World Economic Outlook," IMF Chief Economist Simon Johnson told Switzerland's Finanz und Wirtschaft business newspaper in an interview on Saturday.
The IMF already lowered the forecasts from its July World Economic Outlook in October.
But the numbers would in all likelihood have to be revised down again at the Fund's next update in January, when it gives a preview of its April official forecasts. "We will not be able to stick to 1.9 percent 2008 Gross Domestic Product growth for the United States, nor to 2.1 percent for Europe," Johnson said.
"By how much we will have to lower our GDP forecasts, we will know in January," he said.
The Fund already warned in November the global economic growth outlook had dimmed, because of a troublesome mix of tigher credit terms and rising energy prices.
The U.S. dollar remained overvalued despite its continued drop since 2002, Johnson said, which could be an obstacle for the U.S. trade deficit to gradually diminish.
Too high oil prices and the undervalued Chinese currency boosting exports in U.S. trading partners formed the other side of the trade imbalance equation, Johnson said.
The Chinese yuan -- which the West has often said is held articially low by the government -- was the biggest problem and oil prices should ideally come down to between $60 and $70 a barrel, from prices above $90 now.
"Oil prices are having an impact on short-term inflation expectations in particular, and could lead the U.S. central bank to be less inclined to lower interest rates further," he said.
The IMF did not have a foreign exchange target in mind for the greenback, but it should fall even further despite its persistent decline, to help diminish the U.S. trade deficit and the chance of disorderly currency movements. (Reporting by Douwe Miedema)
© Reuters 2007 All rights reserved
Labels: Markets
