Washington: The world economy is set to contract for the first time in 60 years, as the deepening financial crisis would lead to the global GDP shrinking by up to one per cent in 2009, the IMF warned on Friday.
In its latest assessment of the global economy published on Friday, the International Monetary Fund said that "more sustained, concerted policy actions (was) needed to revive growth" in the economy across the world, as trade volumes have shrunk rapidly despite large stimulus packages announced by advanced economies and several emerging markets.
"Production and employment data suggest that global activity continues to contract in the first quarter of 2009. Global activity is now projected to contract by half to one per cent in 2009 on an annual average basis the first such fall in 60 years," IMF said.
The assessment is part of IMF's analysis provided to the Group of Twenty (G-20) industrialized and emerging market economies in their meeting at London.
However, the global growth is still forecast to stage a modest recovery next year, conditional on comprehensive policy steps to stabilise financial conditions, sizeable fiscal support, a gradual improvement in credit conditions, a bottoming of the US housing market, and the cushioning effect
from sharply lower oil and other major commodity prices.
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