IMF issues forecast on world economy

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Source: CCTV.com | 10-09-2008 08:35

The International Monetary Fund says the world economy is facing a major downturn, which will see growth slow down sharply, to around three percent in 2009.

In this photo provided by the IMF, International  Monetary Fund Chief Economist Olivier Blanchard  speaks during the World Economic Outlook news  conference, Wednesday, Oct. 8, 2008, at the IMF  Headquarters in Washington. (AP Photo/IMF,Eugene Salazar)

It also says the United States is likely to slide into recession.

The IMF projected that the global economy, which grew by a hardy 5 percent last year, will lose considerable speed, slowing down to 3.9 percent this year.

And it'll likely weaken even further, to just 3 percent next year, marking the worst showing since 2002.

The IMF also slashed growth projections for the global economy, and predicted the US will continue to lose traction.

However, the IMF's chief economist says it's not helpful to use the word "recession" when the world is still growing at 3 percent.

Olivier Bernard, IMF Chief Economist, said, "In the normal definition of things, a recession is a negative number and that is not the case. That being said, 3 percent is a very low number for world growth and in the past indeed this might have been defined as on the borderline of a global recession."

The IMF's projection was made before the US Federal Reserve, as well as six other major central banks around the world, slashed interest rates on Wednesday, in an attempt to prevent a global economic meltdown.

The Fed reduced its key rate from 2 to 1.5 percent.

In Europe, the Bank of England cut its rate by half a point to 4.5 percent, while the European Central Bank also sliced its rate to 3.75 percent.

Meanwhile, the central banks of China, Canada, Sweden, and Switzerland have also cut rates. The Bank of Japan says it strongly supports these measures.

The IMF chief economist likewise applauds such action as a step in the right direction.

Editor:Zhang Pengfei