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IMF Predicts Deep Contraction Of U.S. Economy During Second Quarter

Loan Demand
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EDITOR NOTE: If you were to scan financial media for opinions of some of the most prominent investors, you’d find forecasts ranging from uncertain to pessimistic. The case for such a bleak outlook is obvious to everyone, but the target period most are waiting for is somewhere between the second and third quarter. The International Monetary Fund also holds a somewhat pessimistic viewpoint, forecasting a deep contraction in the global economy this quarter. They’ve also determined who the economic winners and losers might be on the world stage. As an investor, it might behoove you to pay attention to their latest economic forecast to be released on June 24 to get a wider view of how our national economy fits into their big-picture view.

WASHINGTON (Reuters) – A defacto lockdown in the United States has lasted longer than expected despite a rollback in some restrictions on mobility, pointing to a deeper-than-expected contraction in gross domestic product in the second quarter, the IMF said on Thursday.

Details will be available when the International Monetary Fund releases its updated World Economic Outlook on June 24, spokesman Gerry Rice told a regular briefing held online.

Given the continuing lockdowns, the pace of recovery in the world’s largest economy could be slower, he said, without giving an exact forecast.

Rice said the Chinese economy was gaining momentum, with high frequency data showing a stronger-than-expected recovery in investment and services through May. Overall, the balance of risks remained on the downside, he said.

IMF Managing Director Kristalina Georgieva and other top IMF officials have said the Fund is likely to revise downward its already pessimistic forecast for a 3% contraction in global gross domestic output in 2020.

The best-case scenario released by the Fund in April had called for the U.S. economy to contract 5.9% in 2020, with a rebound to 4.7% growth in 2021.

At the time, it forecast China would maintain positive growth of 1.2% in 2020, with growth expanding to 9.2% in 2021.

Rice said the IMF was continuing to provide financing to members through its emergency financing and other facilities. A total of $250 billion of the Fund’s $1 trillion in lending capacity had been disbursed so far, he said.

Originally posted on Fiji Times

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