Washington - The downturn in the US housing market, which helped spark a global economic recession that is now in full force, has much further to fall before it reaches bottom, the International Monetary Fund warned in its latest economic forecast Wednesday. The IMF projected that housing prices in the United States will tumble another 10-15 per cent before bottoming out. That is on top of a record 20-per-cent drop in the past two years that has sparked an unprecedented number of foreclosures in the United States.
The housing downturn, which in turn sparked a global financial crisis as banks have lost more than 1 trillion dollars in mortgage- related assets, has sent the United States and world tumbling into its worst recession since World War II.
The US economy will contract 2.8 per cent this year and flat-line at 0.0 per cent in 2010, according to the IMF's updated World Economic Outlook. The world's largest economy has been in recession since December 2007.
The ongoing recession is likely to drive the US unemployment rate into double digits by the end of 2010. The rate currently stands at 8.5 per cent, according to the US Labour Department, and 5.1 million jobs have been lost since the recession began.
While there have been "some positive signs" over the last few weeks that the United States' economy might be bottoming out, IMF economist Charles Collins warned that a recovery is unlikely to come start before mid-2010.
"These are very early days. We should not expect a return to growth any time soon," Collins told reporters.
