World Growth Forecast Reduced by the IMF
The International Monetary Fund (IMF) claims that the world will go through economic downturn in the next several years as a result of slumping economies primarily led by what many economists believe is the beginning of an American recession. Despite George Bush’s avoidance of the word recession, the American economy has been plummeting due to the collapse of the mortgage finance lending and sub-prime mortgage markets, which in-turn has left hundreds of thousands of lower and middle class homeowners defaulting on their mortgage loans. This slump can be seen in losses of over a trillion dollars in stock-market panics of the last month. The recession is also affecting other sectors of the global economy such as consumer credit, commercial property, and company debt. In its latest economic forecast the IMF predicts that world economic growth will slow to 3.7% in 2008 and 2009. 1.25% lower than the growth of 2007. The IMF suggests that the downturn is being led by the United States but is affecting the whole
world with a ¼ chance that it will send the world into a global recession. "The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression," the IMF report says. To date house prices have fallen by around ten percent in the United States and are expected to fall 17% to 20% in the next year. The housing market has been slumping in the last year due to speculation causing inflated housing markets and subsequent devaluation. American economic growth is forecasted to contract to 0.5% growth in 2008 and 0.6% growth in 2009 so the chance of an extended recession is very likely. For Canadians who peg their dollar on American currency and maintain the United States as our biggest trading partner economic turbulence looks all but inevitable.