IMF: No U.S. growth 'til mid-2009

U.K. bank head: Recession likely

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WASHINGTON (CNN) -- The International Monetary Fund on Wednesday issued a gloomy economic outlook for the United States and the Western Hemisphere, saying U.S. economic growth will be close to zero or even slightly negative for the rest of 2008 and the following few months.

In a new report that uses data from as recent as mid-October, the IMF projects economic recovery in the United States will not begin until the second half of 2009, and will be more gradual than previous recoveries because of the exceptional nature of the asset price adjustments taking place.

In Canada, growth for 2008 will be about 0.3% but is projected to rise to 1.7% for 2009. The report says Canadian banks have weathered the financial crisis fairly well because of more conservative regulation and less reliance on toxic investments.

Overall, the IMF says, growth in the advanced economies as a whole will also be close to zero at least until the middle of 2009.

The IMF now projects a major downturn for the global economy, with growth falling to its slowest pace since the 2001-02 recession as a result of the ongoing credit crisis, along with extremely volatile commodity markets worldwide.

The report suggests the massive and increasingly coordinated action of major industrialized countries will ultimately be successful in stabilizing the world economy, but that recovery will not be speedy.

For other areas of the Western Hemisphere, the IMF describes the combination of negative shocks as a "negative feedback loop," meaning that the freeze in global credit markets, weaker external demand, and lower commodity prices are combining to make each of those factors even more painful.

Even with those factors, however, the IMF projects that Latin America and the Caribbean regions will grow at a 3% rate - about average for emerging markets worldwide.

Nevertheless, for countries that have been growing much faster than that, economic conditions will feel much more sluggish. Lower commodity prices will be the significant dampener for these emerging economies that have benefited from higher prices in recent years.