Global economy in ‘major downturn’ from financial crisis: IMF

WASHINGTON, October 8, 2008 (AFP) – The International Monetary Fund said Wednesday that the global economy was sinking in a maelstrom of financial turmoil and faced a painful crawl toward recovery in 2009.

“The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s,” the IMF said in its biannual World Economic Outlook (WEO) report.

The IMF revised downward its July forecasts for global economic growth to 3.9 percent in 2008 and 3.0 percent in 2009, the slowest pace since 2002. The markdowns shaved off 0.2 percentage point and a hefty 0.9 point, respectively.

“The major advanced economies are already in or close to recession, and, although a recovery is projected to take hold progressively in 2009, the pickup is likely to be unusually gradual, held back by continued financial market deleveraging,” the 185-nation institution said.

The WEO forecasts were released hours after the Federal Reserve and five other central banks coordinated cuts in interest rates to boost economic growth and jump-start credit flows.

The IMF said that emerging and developing economies were also slowing, and in many cases to rates well