17 Apr 2009

World recession to be unusually severe - IMF

6:46 pm on 17 April 2009

The recession gripping the world economy is likely to be unusually severe and the eventual recovery sluggish, the International Monetary Fund says.

The IMF said commentators are correct in comparing the current downturn with that of the Great Depression.

Last month, an IMF report predicted the world economy would shrink for the first time in 60 years in 2009 - by as much as 1% - while it expects a modest recovery of between 1.5% to 2.5% growth in 2010.

The implications of these findings are sobering, the IMF said of the report. The downturn is highly synchronised and associated with a deep financial crisis, a rare combination in the post-war period.

Recessions linked to financial crises are more severe and longer lasting than recessions associated with other shocks, the organisation said, while recoveries have been typically slower because they are associated with weak domestic demand and tight credit conditions.