No US Economic Recovery This Year: IMF Chief

Source : The Straits Times, May 3, 2008

WASHINGTON - INTERNATIONAL Monetary Fund chief Dominique Strauss-Kahn said that he does not see the United States economy recovering from its current doldrums this year.

Describing a US government labour report on Friday that showed fewer than expected job losses as a 'flash in the pan', the IMF managing director said on Friday 'the medium-term trend remains what has been forecast and the US economy would not be on the road to recovery before the end of the year'.

The IMF has forecast a 'mild recession' in the United States, with annual growth a paltry 0.5 per cent.

Mr Strauss-Kahn, speaking to reporters after meeting with French Prime Minister Francois Fillon at IMF headquarters, cautioned that 'one must wait to see the next US data'.

The US Labor Department reported US employers cut 20,000 nonfarm jobs in April, far fewer than private economists' forecasts of 75,000.

The jobless rate fell a tenth of a percentage point to 5.0 per cent, the department said, instead of the expected rise to 5.2 per cent.

While still a weak number, it reinforced the view that the US economy is stabilising and that the Fed may therefore take a pause in its rate-cutting campaign.

Mr Strauss-Kahn, a former French finance minister who took the top IMF post in November, said the numbers were 'not bad but I fear that is only a flash in the pan'. The US Commerce Department this week estimated the economy grew at an annual 0.6 per cent in the first quarter, the same pace as in the fourth quarter.

The expansion was stronger than economists' consensus forecast and helped ease fears that the world's largest economy was slumping amid a severe housing downturn and credit crisis. -- AFP