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IMF cool on recovery prospects for the US

The International Monetary Fund (IMF) is of the belief that the US economy may well be primed for a short term recovery but there are concerns about the medium to longer term situation. A significant fiscal stimulus programme instigated by the Obama government has the potential to drive the US economy kicking and screaming to higher levels. GDP forecasts for the current year have been revised from -2.8% to -2.5% and for 2010 from 0% growth to 0.75% growth which is a very positive move.

The one potential problem is that the significant debt taken on by the Obama government may not be enough to put the US economy on a firmer footing and a short term recovery could soon run out of steam. If this was the case then the US government would struggle to raise significant funding for a further fiscal stimulus program which could in turn depress the US economy again.

There is no doubt that despite the recovery potential of the worldwide economy as a whole, and the likes of the US and the UK, there are still hurdles ahead in the road. The danger is that consumers and companies around the world take their eyes off the ball and believe the worst is over only to find out that the worst may yet be to come!

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