GUERNSEY is feeling the effects of the credit crunch, according to Treasury minister Charles Parkinson.
He said yesterday that the International Monetary Fund had been hasty in raising its global economic forecast and that Guernsey, like everywhere else, was still feeling the impact of a global slowdown.
The IMF has said that it now expects the global economy to grow by 4.1% in 2008, up from an initial forecast of 3.7% in April, because it believes the impact of the credit crunch was not as severe as had been first feared.
‘I find it a little surprising because the credit crunch seems to be biting fairly hard at the moment,’ said Deputy Parkinson (pictured). ‘But if they are right, then that is an improved outlook.’
He said it was likely that the IMF was just trying to paint a brighter picture of how things were shaping up for the global economy.
But on a positive note he said that Guernsey’s finance industry appeared to be enjoying continued growth, although the full extent of this would not be known until all the second quarter statistics were in.
However, he also accepted that while the main moneymaker of the island was ‘powering ahead’, there still appeared to be a slowdown in the domestic economy.
‘People don’t appear to be spending money in shops or buying cars, for example. There’s a slowdown in that area and it looks like it will get worse before it gets better.’
Based on its new calculations, the IMF expects the UK economy to grow by 1.8% in 2008 and 1.7% in 2009, which is up from a previous forecast of 1.6% in both years.
This is compared to the UK Government’s own estimates of 2% this year and 2.5% in 2009.
The country with the biggest growth forecast is China with 9.7% predicted in 2008.
However, the IMF did still urge countries to be careful and added that risks to the world economy from the financial sector remained elevated and said inflation was an increasing concern.
Deputy Parkinson said that more detailed analysis of the economy’s performance between April and June would be made available in the next Treasury and Resources quarterly bulletin.
He expects this to be made available for release in August.
Article posted on 19th July, 2008 - 9.30am
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