The IMF and World Bank continue to play leap-frog in reducing their global growth forecasts.
Today, the IMF joins the Bank in suggesting growth will contract by 0.5% – 1% in 2009. It has also cut its regional forecasts very sharply:
USA growth will be -2.6%, down from -1.5%
Euro area growth will be -3.2%, down from -2%
Japanese growth will be -5.8%, down from -2.6%
Emerging economy growth will be just 1.5%-2.5%, versus 5% plus
The Fund pessimistically now expects the world’s advanced economies to “contract sharply in 2009″. It adds that: “Turning around global growth will depend critically on more concerted policy actions to stabilize financial conditions as well as sustained strong policy support to bolster demand.”