IMF forecasts set to spread further gloom

London: The International Monetary Fund (IMF) will sharply cut growth forecasts this month and the world will not return to strong growth for two or three years, IMF Managing-Director Dominique Strauss-Kahn said on Wednesday.

"Things are not improving," Strauss-Kahn said in an interview with the BBC's Hard Talk programme.

IMF's last forecast was "not that good" and a new forecast, to be released in a few days, will be "even worse," he said.

Asked about the fund's forecasts for the world, US and European economies, Strauss-Kahn said he did not know exactly how much these would be cut, but added, "I'm afraid that at least half a point or one percentage point down."

In its November forecast, the IMF projected world output would grow by 2.2 per cent in 2009 while the US would shrink by 0.7 per cent and the euro area would shrink by 0.5 per cent but the credit crunch has tightened its grip since then.

Asked if the downwards revision meant the IMF expected a contraction in US and European economies of between one and two per cent this year, Strauss-Kahn said: "There is going to be this kind of contraction in the US, in Europe, including the UK."

Emerging countries, while still growing, would also do worse than expected, he said. "China, India, Brazil, [among] other emerging countries are going to experience very slow growth."

"Altogether, this first half of 2009 will be bad, the second half may show some improvement," he said.

2.2% IMF November forecast for world output

0.7% US contraction projected by IMF in November

0.5% IMF forecast for euro zone shrinkage