IMF report warns of sharper than expected slowdown in U.S. economy
SINGAPORE, July 12 Kyodo
The International Monetary Fund has warned of the risk of a sharper than expected economic slowdown in the United States that could slow global growth, according to a report released Tuesday.
”There are risks to the global economic outlook that have tilted to the downside,” the IMF said in its semiannual Global Financial Stability.
It said this includes ”a more rapid cooling-off in the U.S. housing market, leading to a pronounced slowdown of the U.S. economy. The potential for a disorderly unwinding of global imbalances remains a concern.”
Other risks cited were an intensification of inflation pressure that would require more monetary tightening than currently expected and further rises in crude oil prices.
It said that under these risk scenarios, international financial markets could undergo more severe corrections.
And under volatile market conditions, emerging market economies with large current account deficits that are heavily reliant on international portfolio capital flows would be vulnerable, it said.
The IMF report urged countries that still rely heavily on external financing to continue to reduce vulnerabilities and pursue reforms that will help sustain their current growth performance.
But overall, the report said, the global outlook remained favorable for both economic growth and inflation.
”Under this scenario, corporate earnings growth would remain healthy,” it said.
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