Foros de la Plataforma por una Vivienda Digna

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Global recession not necessarily imminent, says IMF economist - report

Global productivity is improving and an economic recession is not necessarily due next year, the International Monetary Fund's chief economist Raghuram Rajan told the Financial Times.

Speaking ahead of the Sept 19-20 annual meetings of the IMF and World Bank in Singapore, Rajan told the newspaper that 'there has been a really healthy rise in productivity the world over ... everyone knows about the productivity story in the US but not many people know it has also been happening a lot elsewhere.'

Rajan said, however, that gains in productivity risked being negated by the lack of 'urgency' in fresh policy reforms.

'What I see now is the urgency for policy reform is rather muted,' he said.

Rajan disagreed with predictions of a recession next year, saying: 'The risks are two-sided.'

Referring to the US economy, Rajan said: 'The million-dollar question is whether the slowdown is enough to quell the inflationary pressure or whether you need more rate rises.'

The US Federal Reserve in its last meeting on Aug 8 left its key interest rate unchanged at 5.25 pct after raising them by 25 basis points each at its last 17 meetings. It next meets Sept 20.

Rajan is also not disheartened by the lack of progress by major countries to rein in so-called global imbalances -- the US's budget and trade deficits, coupled with large surpluses in China, Japan and oil-producing countries.

'What's been taking place is that these prescriptions are now internalised -- countries are saying 'yes, we haven't done entirely what you ask, but we are making progress'.'

'It is progress getting everyone to accept these prescriptions. Are we satisfied? Absolutely not.'
http://www.forbes.com/markets/feeds/afx/2006/09/13/afx3015642.html