IMF predicts a virtual standstill for world economy in 2009

Special Report:Global Financial Crisis

The world economy will essentially come to "a virtual standstill in 2009", growing by only 0.5%. The International Monetary Fund made the projection in two reports released on Wednesday.

TheIMFpredictstheUSeconomywillshrinkby1.6%
thisyear

The new IMF forecast is a sharp reduction from its projection of 2.2 percent growth in November. Chief IMF economist Olivier Blanchard said the IMF expected developed economies would see the sharpest contraction since World War Two. The IMF predicts the US economy will shrink by 1.6 percent this year. The 16 European nations that use the euro currency will see their economies shrink by 2 percent, while Japan's economy will contract by 2.6 percent.

The IMF also raised its estimate of the total losses for banks and other financial service companies stemming from bad loans in the United States to 2.2 trillion US dollars. That's up from the previous estimate of 1.4 trillion US dollars in October.