The US economy has "solidified" over the past year and the outlook is favorable, but is relying on "unprecedented borrowing" from foreign sources, the International Monetary Fund (IMF) said on Friday.
The IMF staff's latest report card on the US economy said it remains "the main locomotive of global growth," outperforming the other Group of Seven industrialized nations.
The US economy should grow at a pace of around 3.5 percent in the next two years as the expansion matures, the IMF report said.
"Over the past year, the expansion has solidified as robust productivity growth and high corporate profits have contributed to a strong rebound in business investment and an acceleration in employment," the report said.
But it added that there is no sign that the large current account deficit will be reduced.
Returning to a familiar theme, the IMF staff said the low household-savings rate and large federal budget deficit creates a number of vulnerabilities for the economy, including the possibility of a large slowdown of household spending, especially if the housing market were to cool.
At the moment, foreign investment flows are taking the place of low US savings. But an abrupt shift in these flows could lead to higher interest rates and disorderly capital markets, the IMF staff warned.
"A record-low household-saving rate and a large federal fiscal deficit are being supported by unprecedented borrowing from foreigners and domestic firms," the IMF said.
"This unusual constellation of financial flows has sustained growth by keeping long-term interest rates low and stimulating house prices. However, this creates a number of vulnerabilities, including the possibility of a marked slowdown of household spending, particularly were the housing market to cool."
A more detailed report on the US economy from the IMF will be written after the IMF executive board reviews and comments on the staff report.
The IMF staff praised the Fed's handling of monetary policy, saying that its "skillful communications strategy" has allowed a gradual pace of tightening.
The IMF said that reduced slack in the economy now implies a less benign inflation outlook. It said the Fed was right to warn financial markets in its May 3 statement that more forceful tightening might be required if price pressures continue to intensify.
The staff repeated the IMF statement that the US administration's plan to cut the deficit in half by fiscal year 2009 is welcome but not ambitious enough.
It said Washington should "explore options for revenue enhan-cements" and not just examine ways to simplify and improve the efficiency of the tax code in a revenue-neutral manner.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day