The world economy will contract this year for the first time in 60 years with any modest recovery in 2010 dependent on a range of factors, the IMF said overnight.
In its latest assessment of the global economy the IMF has downgraded its global growth forecast for 2009 to between -0.5 and -1.0 per cent, a considerable revision from the 0.5 per cent forecast in January and 2.2 per cent forecast in November.
The organisation also forecast a global recovery in 2010 with world output estimates between 1.5 and 2.5 per cent.
This was conditional however on comprehensive policy steps to stabilise financial conditions, sizeable fiscal support, a gradual improvement in credit conditions, a bottoming out of the US housing market and a sharply lower oil and commodity prices.
Delays in policy measures to stabilise financial conditions in particular “would result in a further intensification of the negative feedback loops between the real economy and the financial system, leading to an even deeper and prolonged recession” the IMF warned.
