IMF hopes slow, weak recovery from recessionApril 16th, 2009 - 9:48 pm ICT by IANS
Washington, April 16 (DPA) As some major economies begin to show signs of stabilising, the International Monetary Fund (IMF) Thursday warned that any global recovery from the downturn could last more than three years.
The IMF and its sister lending agency, the World Bank, have already predicted that 2009 will mark the first worldwide contraction since World War II. The IMF’s latest report, which draws on lessons from past downturns, suggests that the global economy could remain sluggish well beyond that timeframe.
The financial crisis, which began last year in the US and Europe but has since wreaked havoc on economies across the world, combined with the global nature of the downturn meant government efforts to revive their economies were having less success than in past crises.
Such recessions can last as long as two years, but it takes another three and a half years on average for economies to recover to their level of output before the crisis, the IMF said, according to evidence drawn from similar downturns.
“The fact that the current downturn is highly synchronized and associated with deep financial crises suggests that it is likely to be persistent, with a weaker-than-average recovery,” said IMF economist Alasdair Scott, who co-wrote the report.
“The current recession is likely to be unusually long and severe,” Scott said. “Based on historical patterns, recovery is likely to be slow and weak.”
But IMF chief economist Olivier Blanchard warned there were few similar examples and that the current recession was “very different” from past cases, making solid predictions on the future difficult.
The IMF will release its full updated economic forecasts - the World Economic Outlook - next week ahead of a meeting of finance ministers and central bank heads from the world’s top economies in Washington.
The report comes amid signs that the situation in some major economies may be stabilizing.
The US Federal Reserve Wednesday said many regions of the country were showing small signs of improvement amid better-than-expected data from US manufacturing, housing and banking.
China last week pointed to improving domestic demand and rising import and export numbers as signs that its own economy may also be on the rebound.
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