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US Fiscal Cliff Is 'Major Concern' for World: IMF's Zhu
The U.S. needs to provide more clarity to ease fears about the “fiscal cliff’” of tax hikes and spending cuts that are due to kick in in January, Zhu Min, deputy managing director of the International Monetary Fund (IMF) said on Friday.
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Bloomberg | Getty Images Zhu Min, deputy managing director of the International Monetary Fund (IMF) |
The U.S. Congressional Budget Office and the IMF have said that if the fiscal tightening that is due to take place early next year goes ahead without action from Congress, the U.S. economy will probably fall into recession.
In short, the “fiscal cliff” is a “major concern” for the whole world,” Zhu said, urging Washington to take action to soothe worries.
“It’s very clear that if the whole tax package moves off the table it will immediately bring the U.S. into a recession, which will have a huge negative impact on the whole world,” Zhu told CNBC on the sidelines of the IMF’s semi-annual meetings in Tokyo.
“But it’s also very clear, that it will not happen that way,” Zhu said.
Economists peg the damage from the impending fiscal tightening as high as $720 billion, which will wipe off 4.6 percent from gross domestic product (GDP). And there are concerns about whether investors will continue to lend money to the U.S. given the country’s $16 trillion debt and $1.1 trillion budget deficit.
(Read More: ‘Fiscal Cliff’ May Be Felt Gradually, Analysts Say)
“The most important thing for the time being is we really encourage the U.S. to provide more clarity and to tell the world what (will happen),” Zhu said.
Replying to a question about whether the IMF had talked to the U.S. government about seeking more clarity on fiscal policy, Zhu said: “We talk with all governments. It is important to reduce the uncertainty.”
Can China Do More?
Zhu said there were signs that Asia’s big economies, China and India, were showing signs of stabilizing after months of slowing growth.
(Read More: IMF Cuts China, India, Emerging Asia Growth Forecasts)
He added that China, which has disappointed financial markets with a reluctance to deliver a large stimulus package to support its flagging economy, has the room to maneuver in terms of its fiscal and monetary policy.
“I would say China needs to stabilize growth and needs to put more (emphasis) on demand,” Zhu said.
“They do have the space to move, they have a lot of fiscal space. Government debt is only roughly 28 percent (of GDP) and they have a lot of monetary space also,” he added.
The IMF earlier this week lowered its GDP forecast for China, saying the world’s second biggest economy was likely grow 7.8 percent this year and 8.2 percent in 2013, aided by interest rates cuts in June and July.
In July, the IMF estimated China to grow 8 percent this year and 8.5 percent next year.
- By CNBC's Dhara Ranasinghe
Hello friend
nice morning to wake up to....haha. expected big rally..
ok below my thoughts....to hold or sell...pls comment.
1) Results announcement on 1st Nov
If price cross over $10, results will be dismal, we need to forecast what many % sell off? Let's say predict 25% which is huge, then hold on to it. I dont think it will spiral down to below $6 again but of cos this counter is highly volatile, can see lots pple go for qiqo. Smart pple know this sector results will recover next Q as its winter- sesonal growth is in, so those can hold will do so.
2) US Election 4 Nov
To me this is most crucial date. If Obama wins 2nd term, this stock may be dump as no one biz, every1 knows he is not for coal etc. So we need to let go some holdings too, to be save.
If Romney wins, dont care liao, time to chase the price. Prepare all bullets, all accts - CFDs to load up more for pump up either qiqo or short or long term.
3) Fiscal Cliff
I think most pple or analysts beware this event. But i think should not be too big of hiccup - whoever the new US President and the politicians know the congress need to get its act together or there will be spiral effects. Even if they may disagree at first, there shld be interim policies in place for the moment being.
| khng2012 Senior | Posted: 11-Oct-2012 22:50 |
 x 0  x 0 | http://www.equities.com/news/headline-story?dt=2012-10-11& val=584021& cat=energy 1 Nov to announce 3Q report. Don't know if hold till that day since it will not look good. Wah 8.19, seem like no cap |
Ya. All huat. Hope you bought back after you contra it recently.
Can't find any news why it chiong non-stop. May be Romney obtain more support. Obama really stupid, war with coal for 4 years and gain nothing, if he really do it and ban coal, not too long, after this winter, natural gas price will surge to roof and american will kill Obama. Once Romney go up, I believe Alpha can hit 66 in 1 year.
yabbest ( Date: 11-Oct-2012 22:07) Posted:
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yes thx bro... NAR very aggressive, hope it breaks $8...then next week more upswing..
US shares very dynamic on its day, up/down fast...honestly sometimes to get it must chase buys, within 30 mins over 4 mil traded, which i like.
yes lets huat together...
| khng2012 Senior | Posted: 11-Oct-2012 22:01 |
| x 0 x 0 | You bought Midas must support Alcoa. Hahaha... I won't touch it too. The low metal commodity price don't know when to end. Bought Alpha just because it is unreasonable cheap, take it and earn first. Actually, Alpha shall be at the price level which is same as Peabody which is about 25 dollars now instead of same as Arch coal (if coal price go worse, next one to bankrupt) at about 7 since their revenue and company size is quite close to each other. The difference is only Peabody expand business to Australia which is closer to china to export. Us coal is too expensive to export to china, Europe is their oversea market and Europe is bad. So gonna press down. So take this opportunity to huat first. |