Washington, Nov 7: The International Monetary Fund (IMF) has predicted that advanced economies might continue to face recession during the next year, and that their economies would shrink by 0.3 per cent in 2009 instead of registering a 0.5 percent growth, as estimated earlier. The 185-nation financial institution said this in an update of its October World Economic Outlook (WEO) report. In sharp downward revisions to its last economic projections made less than a month ago, the IMF said that the advanced economies would contract next year for the first time since World War II and called for government spending to battle the global financial crisis.
The IMF also lowered its global economic growth forecast by 0.8 point to 2.2 per cent. "Prospects for global growth have deteriorated over the past month, as financial sector deleveraging has continued and producer and consumer confidence have fallen," The News quoted the IMF as saying.
"In advanced economies, output is forecast to contract on a full-year basis in 2009, the first such fall in the post-war period," the IMF said and added that the downturn in advanced economies would be "broadly comparable in magnitude" to recessions in 1975 and 1982, but that "a recovery is projected to begin late in 2009."
"Our forecasts are based on current and currently announced policies. It is likely that policies will be more expansionary than we assume. We'll advocate at the G20 a global fiscal expansion," IMF chief economist Olivier Blanchard said at a news conference.