The International Monetary Fund is not predicting a recession for the United States although risks of one have increased, an IMF spokesman said on Thursday.
Spokesman Masood Ahmed said the US growth outlook had clearly weakened further since the IMF's last global economic update in October, as the economic impact from the US subprime mortgage market and related financial turmoil has intensified.
"Although the recession risks have increased, at this point we do not forecast a recession for the US as our central scenario," Ahmed told a regular news briefing.
He said growth in Europe and Japan will "certainly be affected by a deeper US slowdown". Asked whether interest rate cuts by the Federal Reserve had helped ward off a recession, Ahmed replied: "So far we think that the actions taken on monetary policy have been supportive and timely."
For the global economy, he said growth prospects for 2008 also had weakened but declined to go into details, noting that the IMF would release an economic update of its twice-yearly World Economic Outlook on January 25. Ahmed said headline inflation had increased in the United States and euro area due to pressures from higher energy and other commodity prices.
But concerns were mounting about possible secondary effects on core inflation from higher energy and food prices, which would pose a challenge to policy-makers, he added. Several emerging markets were now facing inflationary pressures from strong domestic demand, as well as the higher food and energy prices, and some had appropriately responded by adjusting monetary policy, he noted.