Thursday, April 16, 2009

IMF speaks on Recession

Seeing the current economic scenario there is a need of rigorous Fiscal and monetary Stimulus Packages all round the world. The Financial Sector needs to be brought in confidence again with some good economic and strategic policies.

International Monetary Fund

New IMF analysis published on Thursday shows recessions tied to financial crises, such as the current one which has its roots in reckless bank lending to the U.S. housing market, are more difficult to shake because they are often held back by weak demand.

Worse to add to this situation is the weakening of the strongest economies. In this fiscal quarter the downturn has been more than previous quarters giving a clear negative trend till the end of this year.
Analysts have predicted the Recovery period to come in phase by the end of the year.

The fund's analysis also says that emerging market economies, including those with sound economic policies, are not insulated from recessions beginning in major economies since they are often accompanied by a drop in exports and capital flows.

Clearly, given that capital flows are an important ingredient for emerging economies, it is most likely going to be the case that the recovery will not be possible without a recovery first taking place in advanced economies.

Stephen Danninger, a senior economist in the IMF's research department

According to the research the may last longer by a 1.5 times then expected, giving a deviation of atleast 40%(A very big figure to think of).

The analysis suggested that the combination of financial crisis and a globally synchronized downturn is likely to result in an unusually severe and long-lasting recession the IMF said.

Adding to the heat is the Downgrading of the Developed Economies. Turning to emerging economies, the IMF said the current level of financial stress in emerging market countries has already hit peaks seen during the 1997-98 Asian crisis.

This also been due to abrupt variances in the Capital Market and the Currency Burden they have to come up with.

In the Last Words the IMF hinted the emergence of some Developing Economies as Powers by the end of t his Turbulent Recession.

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