IMF chief warns financial crisis will worsen in 2009

[Naveed Yaseen]

SAN JOSE (December 13 2008): International Monetary Fund chief Dominique Strauss-Kahn warned Thursday that the financial crisis would worsen in 2009 and affect the whole world, during a visit to Costa Rica. "2008 was a difficult year in the world economy but in no way can we expect 2009 to be better," the IMF managing director said during a joint news conference with President Oscar Arias.

"This is true anywhere, all around the world, in the United States, in Europe. The IMF is expecting negative growth next year." The IMF head said he was studying measures to tackle the crisis during his visit to Central America and the Caribbean, including the possibility of financial support. "This crisis is a globalized crisis and there is no way for one country to have (an isolated) reaction or policy," he said.

"In Europe, some countries, especially Central European contries, may experience a very difficult situation because they have developed in the last 10 years with a lot of (foreign) capital inflows," he added. The financial meltdown has eroded economic growth and thrown the US and other major economies into recession. Strauss-Kahn again urged governments Wednesday in Jamaica to use spending, rather than interest rate cuts, to battle the crisis.

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