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IMF warns of 'perfect storm'
that could drag Britain into recession
ALEX BRUMMER
UK
Daily Mail
Thursday November 29, 2007
One of the world's leading financial experts has
warned that a "perfect storm" could be about to hit
Western economies.
There is rising concern that the U.S. economy will slip into
recession next year dragging many Western economies - including
Britain - down with it as the global credit crisis worsens.
The Washington-based International Monetary Fund has warned of
a "perfect storm" caused by surging oil prices and the
turbulence on the world's financial markets.
Its chief economist, Simon Johnson, said: "The combination
of the global credit crunch and high oil prices could bring a
big reduction in international trade from which no one would be
immune."
(Article continues below)
Mr Johnson cautioned that the current projections for the American
economy and those of Europe are "too optimistic" and
would have to be downgraded.
Only last month, in its World Economic Outlook report, the IMF
suggested the U.S. and the West would weather the current storms
on financial markets but lowered its growth forecast for the American
economy to 1.9 per cent this year and next from 2.9 per cent in
2006.
The Federal Reserve, the U.S. central bank, joined in the gloom.
It reported in its analysis from the American regions that "mortgage
delinquencies are up significantly in many areas" and "homebuilding
is not expected to recover until well into next year".
Britain's largest bank said it was "nervous about how the
UK housing bubble will unwind".
HSBC believes the Bank of England may have to lower interest
rates far more aggressively than has been expected if Britain
is to avoid a crash in house prices.
Full
article here.
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