26 Jan 2009

IMF to cut global growth forecast further - official

4:38 pm on 26 January 2009

The International Monetary Fund will cut its 2009 global growth forecast again, this time to between 1% and 1.5%, as economic conditions deteriorate further, an IMF official says.

The IMF's most recent forecast, made in November, was for growth of 2.2%.

Since then, economic indicators have deteriorated to their worst levels in decades, with many of the world's biggest industrial economies in recession.

Axel Bertuch-Samuels, deputy director of the IMF's monetary and capital markets department, told Reuters that global economic prospects have deteriorated in recent months.

He said consumer and business confidence have dropped to levels not seen in decades and activity has dropped sharply.

Economists are bracing for the worst downturn since World War II as most of Europe follows the United States into a recession triggered by the financial crisis that has battered markets and virtually paralysed lending.

Governments have announced bank rescue and stimulus packages worth hundreds of billions of dollars, and G7 central banks have cut benchmark interest rates ever closer to zero, but that has still not been enough to turn the tide.

In November, the IMF had cut projections for world growth in 2009 by 0.8 percentage points to 2.2% from an October forecast.

An official release of updated IMF economic forecasts is expected on Wednesday, and Axel Bertuch-Samuels said even forecasts for emerging markets such as China and India will see downward revisions.