IMF cuts forecasts for global losses
TEXT OF STORY
Bill Radke: The world’s banks and other financial institutions may be in slightly better shape than we thought. The International Monetary Fund has cut its forecasts for losses from the financial crisis. But at a summit in Istanbul, the IMF warned of possible dangers ahead. Here’s Marketplace’s Stephen Beard.
Stephen Beard: The IMF is less pessimistic than it was six months ago. Then, it forecast that global losses from the crisis would hit $4 trillion. Today it thinks that figure will be smaller — about $3.4 trillion.
The Fund points out the global economy is recovering more strongly than expected. Bank balance sheets look healthier. But there is a caveat. The Fund says the crisis is far from over. We shouldn’t be blinded by the buoyancy of financial markets.
Andrew Hilton of the CSFI think tank:
Andrew Hilton: There’s a feeling amongst many economists, and I think many economists at the Fund, that there could indeed be a second leg and that expectations have got ahead of reality.
The IMF reckons the banks are only half way through the process of writing off their losses. There could be some nasty shocks ahead which could trigger another downward lurch in the global recession.
In London, this is Stephen Beard for Marketplace.
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