Imf in ‘global recession’ warning

The IMF has lowered its global growth forecast this week amid fears of economic downturn…

The Washington-based lender estimated a 25% chance of a worldwide economic downturn in its semiannual World Economic Outlook, released on Wednesday. The fund lowered its global growth forecast to 3.7% this year from a 4.1% prediction in January.

A spokesperson for the IMF commented: “We anticipate a mild recession in the U.S, with expansions slowing in Europe and Japan. While central banks have acted aggressively' to inject cash into the financial system, further efforts may be needed because of the danger of a full- blown credit crunch.

US and Europe need to act

The Fund also urged U.S. policy makers to strengthen their response to the housing slump and implored the European Central Bank lower interest rates to stave off a global recession.

This is the third time the IMF has lowered its projections since July, when it predicted global growth of 5.2% this year. IMF economists said the deterioration was due to the "largest financial shock since the Great Depression.''

The fund also warned that the new forecasts are more likely to be revised down than up. "The greatest uncertainty comes from the still-unfolding events in financial markets,'' the report said. Still, "a number'' of the fund's executive directors judged that "the staff's new baseline forecast has been marked down too sharply.''