IMF = Buzzkill

Few would be surprised to hear bleak assessments of this or that markets or currency, but hearing them all at once is somehow jarring. The IMF's recent assessments of world economic growth shows that they see harder times to come and note they even this view may be too rosy.

The IMF lowered its projection for the global expansion next year to 4.8 percent in its semiannual World Economic Outlook, from an estimate of 5.2 percent in July. A weaker outlook for the U.S. was mostly to blame, as the fund reduced its forecast to 1.9 percent, from 2.8 percent.

Far from bringing a sense of containment to the perplexing fallout from the sub-prime issue, the IMF, like so many others, seems to have thrown up its hands as if to say 'buckle-up kids, this could be a rough ride'.

``Risks to the outlook lie firmly on the downside, centering around concern that financial-market strains could continue and trigger a more pronounced global slowdown,'' the Washington-based fund said. ``The immediate task for policy makers is to restore more normal financial-market conditions.''

The IMF built into their analysis a further 50bp reduction in the Fed Funds rate, which I've head/read as a reasonable estimate from many, but with inflation still kicking, who knows what's next?

Aside from predictions of steady, rapid growth in India (8.4%) and China and reasonable growth in Brazil (4%), the IMF report offers little to assuage the nervous. Perhaps the topic that's generating the most worry lately, the value of the dollar, will be them most remembered prediction from the IMF. The headlines will read, "IMF Says Dollar Going to Hell, Fast!"

In foreign-exchange markets, the dollar ``remains overvalued relative to medium term-fundamentals,'' the IMF said, echoing remarks by Managing Director Rodrigo de Rato two days ago. So far, the U.S. currency's depreciation has been ``orderly,'' Johnson said today.

Well, lets hope it's orderly. Looking at a Canadian dollar on par and a Euro closing in on $1.43 could just as easily cause more panic. Dismal science baby - dismal science!