Hot sectors in a tepid recovery
The energy, finance, technology and healthcare industries are expected to be the hottest areas for dealmaking in 2010. Full Article | Full Coverage
IMF-Tighter credit, high debt legacy of US crisis
WASHINGTON, Oct 23 (Reuters) - The legacy of the financial crisis will be tighter credit conditions and heavy public and private debt burdens that restrain U.S. economic growth, the International Monetary Fund said on Friday.
In its regional economic outlook, which provides a more detailed examination than its recently released World Economic Outlook, the IMF said financial conditions are likely to remain "more stringent" than normal for some time as banks work to repair balance sheets.
Treasury interest rates will probably go up over the medium term as the United States grapples with a large fiscal deficit and the costs of supporting an aging population.
In addition, heavily indebted households face a prolonged process of rebuilding wealth lost in the housing and financial market busts, so private consumption may be "sluggish."
"Overall, trend growth could register about 1.5 percent in the next five years, compared with a recent historical average of about 2.4 percent," the IMF said.
In the short term, the IMF credited swift policy response with preventing the financial crisis from causing an even worse economic disaster. It said the U.S. economy "appears to have hit bottom" in the second quarter of 2009.
The IMF repeated its Oct. 1 forecast for 1.5 percent U.S. economic growth in 2010, with unemployment peaking above 10 percent. (Reporting by Emily Kaiser; Editing by Andrew Hay)
