Global economic growth to slow to 0.5 percent in 2009: IMF

[Naveed Yaseen]

WASHINGTON (January 29 2009): The embattled world economy is crawling to a halt under the financial crisis and would grow by only 0.5 percent this year, the slowest pace since World War II, the International Monetary Fund said Wednesday. "The world economy is facing a deep recession," the IMF said in an update of November forecasts that shaved about 1.75 point off its prior global growth estimate.

The IMF said the advanced economies were now seen contracting by 2.0 percent, a sharp downward revision from the negative 0.3 percent estimate two months ago. "Despite wide-ranging policy actions, financial strains remain acute, pulling down the real economy," the 185-nation institution said, warning the outlook was highly uncertain. The United States, the epicenter of the financial crisis, would endure a 1.6 percent contraction, the IMF said, slashing its prior estimate of 0.9 percent.

Nonetheless, the world's biggest economy would weather the financial storm better than most other major advanced economies. Japan's economy would shrink by 2.6 percent in 2009 instead of the mild prior estimate of 0.2 percent. The world's second-largest economy would be in recession for the second consecutive year, following a 0.3 percent contraction in 2008.

The 27-member eurozone economy would hit a wall, suffering a 2.0 percent contraction after growing 1.0 percent in 2008. The previous 2009 estimate was for a 0.5 percent contraction.

Germany, Europe's biggest economy, would shrink by 2.5 percent this year after a 1.3 percent expansion in 2008, according to IMF figures published six days ago. Britain would suffer the most, with gross domestic product (GDP) activity contracting 2.8 percent, after 0.7 percent growth last year. Of the

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