WASHINGTON, Nov 14: The US economy quite possibly will shrink again in the current fourth quarter, a senior US Treasury official said on Tuesday, but should resume growth in 2002, gaining momentum as the year wears on.
The senior official was speaking to reporters in advance of a weekend meeting in Ottawa of the Group of 20 nations — set up to promote growth and stability after the Asian economic crisis of the late 1990s. There also will be a meeting of the International Monetary Fund’s policymaking committee that sets an agenda for the global lender for the next six months.
Meeting participants in the meeting will tackle ways to tighten global tracking of funds used for terrorism as well as how to promote expansion member countries’ economies after the blow to global confidence from the Sept 11, attacks.
The Ottawa meetings, which end Sunday, are expected to draw thousands of protesters, according to protest organizers. But security will be ultra-tight after the attacks on New York and Washington while some sizzle may have gone out of the protest movement amid the shock that reverberated around the globe.
Treasury Secretary Paul O’Neill, head of the US delegation, will try to reassure participants that prospects for the world’s No. 1 economy still remain positive once the current softness passes.
Federal Reserve Chairman Alan Greenspan was also expected to travel to Ottawa.
If the US economy shrinks in the fourth quarter, as is nearly universally expected, that would meet the general definition of a recession in which national output declines for two straight quarters or more. The economy logged a 0.4 per cent contraction in the third quarter.
The United States has pumped about $55 billion in direct aid into helping New York and selected industries, like airlines, deal with the aftermath of the attacks that leveled the World Trade Center in New York and damaged the Pentagon.
Congress is currently considering a broader stimulus programme, worth as much as $100 billion, to spur US expansion vital to the global economy’s health since the United States is the end-market for so much of the world’s products, from Japanese-made cars to Middle Eastern oil.
O’Neill is to hold a series of bilateral sessions on Friday with representatives from countries including Argentina, South Africa, India, Brazil and Canada. In Ottawa on Tuesday, a Canadian official said Argentina’s economic problems almost certainly would be discussed but said there would not likely be talk of further aid for the troubled country.—Reuters
