WASHINGTON (AP) â¿¿ The world's banks could be spared billions in losses thanks to a global economy that is recovering from the financial meltdown more quickly than initially expected.
The International Monetary Fund is forecasting that global bank losses from the financial crisis will total $2.28 trillion, a drop of $533 billion from an estimate made last October.
The IMF said Tuesday that its forecast for losses just for U.S. banks had dropped to $885 billion, down from an estimate of $1.03 trillion made in October.But the IMF cautioned that while risks to the global economy from financial sector instability had lessened from a year ago, the risks from government debt burdens such as the problems in Greece had increased. A debt crisis in Greece is still roiling markets and raising concerns about debt burdens in other countries, including the United States, which has seen the federal deficit surge to a record of $1.4 trillion last year. "While attention has been on Greece, fiscal concerns are not confined to one country," Jose Vinals, director of the IMF's monetary and capital markets department told reporters at a briefing. He said that debt levels in many countries were approaching highs not seen since the end of World War Two II. Vinals said the IMF saw the rise in government debt burdens as a major challenge facing the global economy. He said it was critical for countries to develop credible plans to get control of them. The IMF report attributed the lower estimated bank losses in part to a faster-than-expected rebound in the global economy. The report will serve as one of the discussion documents at the spring meetings of the IMF, World Bank and finance officials from the Group of 20 major industrial and developing nations. The meetings, which will begin Thursday, are taking place against a backdrop that has significantly improved from a year ago, when the world was still in the grips of the worst financial crisis since the 1930s.