IMF says U.S. economic recovery still policy driven

Thanks to a massive and sustained policy response, the U.S. economy has continued to recover from the worst recession since the Great Depression, but the recovery remains policy driven so far, said an International Monetary Fund (IMF) report released on Tuesday.

In the report, titled Regional Economic Outlook -- Western Hemisphere, the IMF said that the U.S. "near-zero monetary policy rates and a doubling of the Federal Reserve' s balance sheet provided liquidity support to the economy."

It also noted that the U.S. government fiscal stimulus measures added more than 1 percent to growth in 2009, with a smaller effect expected in 2010. Capital injections in major financial institutions, emergency lending, stress tests, and guarantees stabilized financial conditions and broke the adverse macrofinancial spiral.

"As a result, stimulus-sensitive components of demand bounced back, including auto and house purchases which were beneficiaries of targeted subsidies," the IMF said.

Besides, the inventory adjustment cycle began to turn around in mid-2009, contributing massively to the recovery.

In its latest World Economic Report released earlier this month, the IMF projected that the U.S. economy would grow 2.6 percent and 2.3 percent in 2010 and 2011, respectively.
(Source:xinhua)