MercoPress. South Atlantic News Agency

IMF forecasts 0.6% global contraction this year

“This is a true global crisis, impacting all parts of the world and countries at different levels of development”.

The International Monetary Fund expects the global economy to contract 0.6% this year, according to forecasts provided on Tuesday by an IMF official in Lisbon.

Teresa Ter-Minassian, an adviser to IMF Managing Director Dominique Strauss-Kahn said the figure was likely to be released shortly by the IMF. It compares with the IMF last official forecast for the global economy, released in January, which pointed to global growth of 0.5%.

The US economy is seen shrinking 2.6% this year, compared with a January forecast of a 1.6% contraction.

The Euro zone economy is expected to contract 3.2%, down from January's forecast of a 2% decline.

Latinamerica is forecasted to contract 0.6% this year but will climb to a positive 2.3% in 2010.

Japan's economy was seen diving 5% this year, sharply down from the last forecast of a 2.6 percent contraction.

The United Kingdom is expected to slowdown 3.8% in 2009 and another 0.2% next year.

However Asia seems to be the only bright spot with 3.6% growth this year and 5.8% in 2010.

Until now, all the IMF has said is that it expects global economic output to be “below zero” and Strauss-Kahn has called the current slowdown the “Great Recession”.

“The scenario will be worse, but the managing director has already said this,” Ter-Minassian said at a conference in Lisbon. “This is a true global crisis, impacting all parts of the world and countries at different levels of development”.

IMF next official forecasts for the world economy will be released before the IMF and World Bank meetings in Washington on April 24 and 25.