IMF predicts global recession
The world will slide into recession next year, the International Monetary Fund predicted today, slashing its global economic forecasts in the face of a growing credit crisis.
In an update of its World Economic Outlook from October, the IMF said global growth would slow to 2.2% in 2009, down from the 3% forecast made last month. Growth of under 3% is considered a global recession.
The US, the world’s largest economy, will contract by 0.7% and the euro area by 0.5% in 2009.
Advanced economies as a whole will contract 0.3%, compared to 1.4% growth this year.
All figures represent a downward revision of more than 0.7% from the IMF’s October forecast.
Developing and emerging economies by contrast will continue to lead growth in the world, increasing 5.1% in 2009. But that is still down from a forecast of 6.1% made in October. Growth in the developing world was forecast at 6.6% this year.
A global financial crisis has severely impacted the availability of credit around the world, curbing spending in wealthy nations and restricting poorer nations’ access to foreign investment.
“There has been a sharp worsening of credit conditions to emerging countries,” said chief IMF economist Olivier Blanchard.
The IMF expects sharp slowdowns in Eastern Europe as well as Russia and its neighbours. China’s economy will continue to grow at 8.5% in 2009, down from 9.7% this year and 11.9% in 2007.
