Monday, December 15, 2008

IMF: Global Recession Ahead

Source : The Straits Times, Dec 15, 2008

MADRID - THE International Monetary Fund chief warned on Monday of a global recession but said the world economy could begin to recover in late 2009 or early 2010 after 'a very difficult year.'

'The global outlook will continue to deteriorate,' IMF managing director Dominique Strauss-Kahn said. 'The possibility of global recession is really in front of us.'

He said declining growth in emerging countries such as China would not make up for recessions in developed countries.

China's economic growth could slip to 5.0 or 6.0 per cent, from the 9.7 per cent forecast by the IMF for 2008 and 8.5 per cent in 2009, he told a symposium in Madrid organised by the Bank of Spain.

'We are facing an unprecedented decline in output and we have evidence of substantial uncertainty limiting the effectiveness of some fiscal policy measures,' he said.

'The most urgent need is a big foot on the accelerator of fiscal expenditure.' He said '2009 will be a very difficult year,' but by 'late 2009, early 2010' the global economy should begin to recover.

The IMF last month forecast that advanced economies would contract next year for the first time since World War II and called for government spending to battle the global financial crisis.

It lowered its global economic growth forecast by 0.8 point to 2.2 per cent. -- AFP

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