IMF set to slash global growth rate

Source: FT

The International Monetary Fund will slash its forecasts for global economic growth this week, saying the downturn is worsening in both rich and poor economies.

Dominique Strauss-Kahn, IMF managing director, said last week that the fund would “significantly adjust” its projections downwards in the light of bad news about growth and continued problems in financial markets.

Reuters on Sunday quoted Axel Bertuch-Samuels, deputy director of the IMF’s capital markets department, as saying that the global growth forecast for 2009 would be cut to 1-1.5 per cent from its current projection of 2.2 per cent, but the fund declined to confirm that number.

Mr Strauss-Kahn said last week he expected more countries to come to the IMF for help, including some in Latin America that were “just on the edge”. The IMF has so far committed about $50bn as a result of the crisis, around a quarter of the resources it has immediately available for rescue lending.

In November, the IMF cut projections sharply for world growth in 2009 to 2.2 per cent, down 0.8 percentage points from an October forecast, noting that industrialised economies were headed for the first full-year contraction since the Second World War.