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The world’s rich economies are shrinking at rates not seen since the Second World War and the downturn may last into 2010, justifying unprecedented policy responses, said an International Monetary Fund official said.
The IMF has already warned it is likely to cut its global 2009 growth forecasts into negative territory from an estimate of 0.5 percent growth it made in January.
“Our calculations suggest that the fall in GDP in the fourth quarter of last year and the first quarter of this year is the sharpest we can find in the post-war records,” IMF First Deputy Managing Director John Lipsky told Britain’s Daily Mail newspaper.
Lipsky said there was a “pay-off” to nations acting simultaneously to boost domestic demand because it would also boost trade. He said monetary policy action was also needed to support the financial system.
