IMF Forecasts Recession for U.S. in 2008

Washington, D.C.–The International Monetary Fund said Wednesday that the U.S. economy would enter a “mild recession” in 2008 that the global economy might echo, the Financial Times reports.Financial market troubles and the ongoing housing decline will cause the recession, according to the Washington, D.C.-headquartered IMF; the U.S. will recover just somewhat in 2009.The IMF also reduced its prediction for U.S. growth to 0.5 percent. In January, the agency had forecast growth would be 1 percentage point higher.However, despite slow U.S. growth, the IMF predicted that emerging economies would continue to expand and said fiscal policy could help increase consumer confidence and play “a useful stabilizing role” if global markets declined.Overall global growth is expected to slow to just 3.7 percent this year, according to the IMF—a reduction from its 4.2 percent January forecast. The IMF feels there is a 25 percent chance that the global economy could experience a recession in 2008 and doesn’t expect much improvement the following year.