RTTNews - The International Monetary Fund said on Monday that, with the help of stimulus funds, the US recession will be less severe than had been feared.

According to the IMF, the US economy will contract 2.5% for 2009, but will expand 0.75% in 2010. Back in April, the IMF said it expected that the US economy would contract 2.8% this year and show no growth for 2010.

The combination of financial strains and ongoing adjustments in the housing and labor markets is expected to restrain growth for some time, with a solid recovery projected to emerge only in mid-2010, the IMF said.

The IMF did note, however, that the US government still has to address concerns over its budget deficit and the strategies it employs to withdraw the massive stimulus given to the economy.

The (Obama) Administration's FY 2010 budget sets out appropriate medium-term fiscal objectives, but further measures will be required to achieve its goals, the IMF said.

It further noted that the monetary and fiscal measures over the last nine months, mainly the Recovery Act and TARP, have prevented the recession from becoming a depression.

The fiscal stimulus-well targeted, timely, diversified, and sizeable-is projected to boost annual GDP growth by 1 percent in 2009 and 1/4 percent in 2010, the IMF said.

For comments and feedback: contact editorial@rttnews.com