IMF projects ‘solid’ US recovery in mid-2010 but big risks

WASHINGTON, June 15, 2009 (AFP) – The International Monetary Fund projected Monday the United States would make a “solid” recovery from recession in mid-2010, but warned of major risks including the real-estate crisis and rising interest rates. In its annual report on the world’s biggest economy, the IMF projected US gross domestic product (GDP) would shrink at an annualized rate of 2.5 percent in 2009 and post modest 0.75 percent growth in 2010.

The outlook was better than the IMF April forecasts of a 2.8 percent contraction this year followed by flat growth in 2010.

“The staff’s outlook remains for a gradual recovery” followed by a “solid recovery projected to emerge only in mid-2010,” the multilateral institution said.

The IMF estimates were less rosy than the latest US official figures. The Federal Reserve on May 20 estimated the economy would contract between 1.3-2.0 percent in 2009, in the worst downturn in decades, and grow at a modest pace between 2.0-3.0 percent in 2010.

John Lipsky, the IMF deputy managing director, said at a news conference that the reduction in the public debt ratio to GDP in President Barack Obama’s budget plan for fiscal year 2010, which begins in October, was based on “relatively optimistic” ec