IMF Suggests Global Slowdown Is On The Horizon

By Stewart Douglas

A global economic slowdown over the near future is very likely, as a by-product of the current credit crunch environment, according to an announcement made today by the International Monetary Fund.

Speaking today on the impact of the US sub-prime situation in its global stability report, the International Monetary Fund suggested that the outcome of the current credit crunch environment would most likely lead to a slowdown in economic growth around the world, with the US economy suffering most significantly.

Whilst it predicted that there might be a recovery in finance markets throughout the US and across the world, it also highlighted that much of the damage already done to the world economy could result in long-term instability in global markets.

International Monetary Fund Chief Rodrigo Rato said that whilst worldwide growth would be buoyed by strength in Eastern markets, the US economic problems would drag growth well below the levels seen in recent years, as a result of the turmoil in financial markets and liquidity problems faced by lenders across the globe.

Former Chairman of the Federal Reserve Alan Greenspan was also particularly vocal over the last few days about the immediate future of the global economy, giving a 50% chance of a US recession over the course of 2008.

The International Monetary Fund is preparing to publish its global economic forecast, which is released in October to reflect year-end projections.  Growth forecasts by industry analysts are already coming in well down on US growth for the period, as well as similar slowdowns for the UK economy.

Whilst the Federal Reserve interest rate cuts should go some way towards stabilising short term financial markets, analysts are suggesting that the long term problems arising from the sub-prime fallout could be felt for the longer term throughout the global economy.