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Tuesday, 25 September, 2001, 08:23 GMT 09:23 UK
IMF shrugs off recession fears
US shopping
The first figures on US consumer spending since the attacks are due on 25 September
The IMF has said it does not expect the global economy to fall into recession as a result of the impact of the terrorist attacks on the United States.

The US economy may slow further than previously expected but "we do not believe there will have been a recession" in 2001 or 2002, according to IMF deputy managing director Ann Krueger.

"We are still on track for economic growth to accelerate in the US sometime this year, (or) early next year", said IMF deputy managing director Ann Krueger.

The IMF will release its twice-yearly world economic forecast on Wednesday. The report is normally released ahead of the IMF annual meeting which was due to take place later this week, but has now been postponed.

Meanwhile, finance ministers from the G7 group of industrialised nations will hold a teleconference to discuss anti-terrorist measures, the US Treasury said late Monday.

Early indications

The first indications of whether US consumer spending has slowed since the attacks will come on Tuesday with the release of consumer confidence figures for September and weekly data on chainstore sales, known as the Redbook.

Consumer spending accounts for about two thirds of the US economy.

The IMF sees "an increased likelihood" of a weaker-than-expected performance from the world's largest economy in the third and fourth quarter of 2001, according to Ms Krueger.

"But then a sharper upturn will follow", she said.

Consumer spending, the one engine still boosting the US economy before the 11 September attacks, rose by the smallest margin in nine months in July despite the stimulus of $300 tax rebates.

G7 ministers to talk

Commerce Department figures showed that consumers spent a mere 0.1% more in July than June for a total of $7,085bn.

Waning interest in durable goods such as cars and household appliances was the key to the meagre increase, with spending down 1.1%, after a 2.3% rise in June.

Many analysts expect that US consumers will be even less willing to purchase major items in the wake of the attacks, being preoccupied instead with political uncertainties and fears of job losses.

A snapshot survey after the terrorist attacks showed that 10% were changing their spending plans, while 20% were reviewing their financial investments and 30% were cancelling travel plans.

The G7 finance ministers will use their teleconference to discuss "anti-terrorist actions in the financial field", said US Treasury Department spokesman Tony Fratto.

He also confirmed that a meeting of G7 finance ministers and central bankers due to take place in Washington this week on the sidelines of the cancelled IMF annual meeting would be rescheduled.

The meeting is being "rescheduled to allow for the development of a new agenda", he said.


Terror's impact

Signs of a slowdown

Rate cuts

Analysis

Key players

FULL SPECIAL REPORT
See also:

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