Nariman Behravesh, Chief Economist at IHS, on the IMF Downgrades

We're joined now by Merriman Farrah Nash he is the chief economist at IHS. -- welcome to the show how are you this morning. Thank you I'm fine -- by itself. Great and I appreciate your joining us in your time. -- I've been watching a lot of reports about the International Monetary Fund. And their projections. For the worldwide economy before we start with that though could you explain in layman's terms to our listeners. Exactly what is the IMF for what's known as the International Monetary Fund. What they IMF with setup right after World War II potentially provide help a bailout money you will for countries that run and the trouble. By that I mean you know that they can't -- much you are or are have a crisis of confidence but whatever -- -- -- by that I mean you know. Money flowing out of the country. That's sensibly bear the provides short a short term call. The countries that run into trouble. Okay now what is the IMF predicting in terms of global growth for the rest of -- And twelve and all of 2013. What -- like us are quite worried about the slow them -- sort of synchronized float down main. And in the global economy. Some of that is because of the big problems in Europe and the fact that you're an -- -- -- -- the sovereign debt problem momma and but another reason. Is that a lot of pressure and emerging markets went to a meter credit tightening cycle which. Went from Tibet to to be the autumn of last year and that has -- a lot of these countries have as well for a different reason not just you're. But it it's what they did as well the article on their content but now you've got everybody slowing it. Everybody slowing down but in the they say getting China. Anything less than a seven and a half percent GDP growth rate. Is going to feel like a recession can you help us understand that because. You know we haven't had that kind of GDP growth in decades. Would it Robert why would it feel like a recession if the Chinese economy's only growing at seven and a half percent. Well the problem that China have that got this huge internal migration a lot of people leaving the arms coming into the city to get jobs. They're generating enough jobs. All those people coming into the city you have to be going at least seven -- -- half -- percent and that's the key here if they don't and all those people coming into the city. Won't find jobs. And I -- you're sort of social problem -- Okay so the emerging markets are slowing down what about the developed markets I'm talking about Canada. The United States Europe I've got to believe is in trouble. Well US and Canada growing probably went through into an app spam that's not great but it's not paralyze their. Europe it is generous passionate look at the whole of the eurozone. Is -- a recession. UK is an effect in -- fashion. Parts of Europe on you know and the during a K Germany and 1% not great. But it better alternative. But Europe and the hole is going probably the worst in the world with the is that it be the with a one region in the world but in recession right now. -- it would seem that the the economic problems are due to lack of demand right there's not enough demand for new cars travel you know everything -- people spend money on. -- what can be done increased demand it seems like the Fed is out of bullets I can't imagine the IMF has much left that they can do. -- what we eat I hate to say but it sounds like we almost either have to let the cycle run or we have to rely on our political leaders to help us get out this. Well -- let me just give your bottom line now what where when I mean I I can't agree that we do need -- -- of Michael run and and the reason that we got into this trouble because we took on too much debt. At some point you have to -- -- spamming. And think -- that's what we're doing in the UN at its forward going in Europe as well. And that deleveraging process of the called. Takes time it's that healing process figures sometime before five years it's not under ghost who we as we know but we have got. How much longer does it go one -- and they are when I don't like are we halfway through the cycle a third of the way through. What probably more than halfway through mid 60% out of the way through and I would say at least some of a couple of years before US comes out of it. Good news is we're making a lot of progress. In cutting back our private sector that how well that and thank you that obviously has been the problem on the government we know that. But the good news as we -- make -- -- progress in the private. Okay so. 2012. Looks like a modest year thirteen -- when we start to see a more robust economic recoveries at 151617. We think toward the end of 2013. Next year and certainly that 2014. Will start to see growth rate close to that Greece -- half a percent which -- feel a lot better that'll help them bring the unemployment rate down a little bit out there. And has been coming down but it looked like that want at least that put that another you're gonna have to. Very good while now Herman I appreciate your time thank you very much for joining us we we we follow your readings pretty regularly. -- that's -- -- bash joining us today he's the IHS. Chief economist journeys today and the financial exchange does get a kick generally the he puts it in layman's terms can understand what he's talking about and that's a good thing but -- -- -- -- -- -- -- -- -- -- --