The International Monetary Fund (IMF) has said the global economy in 2009 is likely to contract for the first time since World War II.
“At this point, we expect global GDP to decline between half a per cent and 1 per cent in 2009 before recovery gradually gets under way in 2010,” said a senior IMF official. “The major advanced economies — the US, the Euro area and Japan — are all suffering severe recessions. The emerging and developing economies are slowing abruptly and many of these are also likely to see falls in activity in 2009.”
The downgrade essentially reflects two assessments.
“First, the data for the fourth quarter of 2008 and for early 2009 show an even sharper contraction in output and trade than we had anticipated earlier as negative interactions between real and financial sectors have intensified,” he said.
The IMF now estimates that global GDP contracted by 5 per cent at an annualised rate in the fourth quarter of 2008.