ID :
43070
Thu, 01/29/2009 - 16:05
Auther :
Shortlink :
https://www.oananews.org//node/43070
The shortlink copeid
IMF predicts 0.5 pct global growth this year due to economic crisis
WASHINGTON, Jan. 28 (Yonhap) -- The global economy is projected to grow by only 0.5 percent this year in its lowest rate since World War II due to the ongoing economic crisis, the International Monetary Fund said Wednesday.
The figure is a sharp reduction from the IMF's earlier prediction of 2.2 percent
in November.
The global lending agency predicted that the world's economy will "experience a
gradual recovery in 2010, with growth picking up to 3 percent helped by continued
efforts to ease credit strains as well as expansionary fiscal and monetary
policies," although "the timing and pace of the recovery depend critically on
strong policy actions."
Output in advanced economies is expected to contract by 2 percent in 2009 in the
first annual contraction during the postwar period, with the economies of the
U.S., the European Union and Japan forecast to contract by 1.6 percent, 2.0
percent and 2.6 percent, respectively, the IMF said.
Emerging and developing countries will likely witness 3.25 percent growth this
year due to "stronger economic frameworks that have provided more room for policy
support to growth than in the past, helping to cushion the impact of this
unprecedented external shock," the IMF said.
China will likely witness the world's highest growth rate of 6.7 percent this
year, followed by India's 5.1 percent. The two fastest growing economies jumped
9.0 percent and 7.3 percent each last year.
Newly industrialized Asian economies will also suffer from a contraction of 3.6
percent this year.
The IMF warned a sustained economic recovery will not be possible unless
governments restore the financial sector's functionality and credit markets and
aggressively implement monetary and fiscal policies, including sizable fiscal
stimulus and large interest rate cuts.
"Downside risks continue to dominate, as the scale and scope of the current
financial crisis have taken the global economy into uncharted waters," it said.
"The main risk is that unless stronger financial strains and uncertainties are
forcefully addressed, the pernicious feedback loop between real activity and
financial markets will intensify, leading to even more toxic effects on global
growth."
The IMF advised that governments "force credible and coordinated loan loss
recognition by providing public support to the viable financial institutions."
"Such policies should be supported by measures to resolve insolvent banks and set
up public agencies to dispose of the bad debts," including a possible "bad bank"
approach, while safeguarding public resources, it said.
On the upside, "Global financial conditions could improve faster than expected
due to stronger policy actions," the IMF said. "This could boost consumer and
business confidence and alleviate the credit crunch, thereby lifting global
growth."
hdh@yna.co.kr
(END)
The figure is a sharp reduction from the IMF's earlier prediction of 2.2 percent
in November.
The global lending agency predicted that the world's economy will "experience a
gradual recovery in 2010, with growth picking up to 3 percent helped by continued
efforts to ease credit strains as well as expansionary fiscal and monetary
policies," although "the timing and pace of the recovery depend critically on
strong policy actions."
Output in advanced economies is expected to contract by 2 percent in 2009 in the
first annual contraction during the postwar period, with the economies of the
U.S., the European Union and Japan forecast to contract by 1.6 percent, 2.0
percent and 2.6 percent, respectively, the IMF said.
Emerging and developing countries will likely witness 3.25 percent growth this
year due to "stronger economic frameworks that have provided more room for policy
support to growth than in the past, helping to cushion the impact of this
unprecedented external shock," the IMF said.
China will likely witness the world's highest growth rate of 6.7 percent this
year, followed by India's 5.1 percent. The two fastest growing economies jumped
9.0 percent and 7.3 percent each last year.
Newly industrialized Asian economies will also suffer from a contraction of 3.6
percent this year.
The IMF warned a sustained economic recovery will not be possible unless
governments restore the financial sector's functionality and credit markets and
aggressively implement monetary and fiscal policies, including sizable fiscal
stimulus and large interest rate cuts.
"Downside risks continue to dominate, as the scale and scope of the current
financial crisis have taken the global economy into uncharted waters," it said.
"The main risk is that unless stronger financial strains and uncertainties are
forcefully addressed, the pernicious feedback loop between real activity and
financial markets will intensify, leading to even more toxic effects on global
growth."
The IMF advised that governments "force credible and coordinated loan loss
recognition by providing public support to the viable financial institutions."
"Such policies should be supported by measures to resolve insolvent banks and set
up public agencies to dispose of the bad debts," including a possible "bad bank"
approach, while safeguarding public resources, it said.
On the upside, "Global financial conditions could improve faster than expected
due to stronger policy actions," the IMF said. "This could boost consumer and
business confidence and alleviate the credit crunch, thereby lifting global
growth."
hdh@yna.co.kr
(END)
