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IMF Warns That Global Economy Faces Collapse in Growth

September 11th, 2010

An additional signpost on the road to a double dip recession for advanced economies came from the latest briefing note issued by the International Monetary Fund. According to the IMF, global economic growth is likely to shrink in the last quarter of 2010. In essence, this means that the supposed recovery, artificially stimulated by unprecedented levels of public debt, has in effect failed.

The contents of the IMF briefing note contains other indicators of growing concern about the future trajectory of the global economic crisis. There is a stern warning about unsustainable public deficits  in advanced economies that need to be reined in; imbalance in the level of exports versus imports in these same economies; growing risks of proliferation of sovereign debt crises similar to what Greece is currently experiencing.

Perhaps the most sober element in the IMF report is a warning about the ramifications of the worsening home repossession crisis in the United States. Since the U.S. housing market was ground zero for the 2008 global financial crisis, this would seem to indicate that the other shoe is still to drop on American real estate weaknesses and the further damage it may inflict on the global economy.

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