IMF: World economy in severe recession

The International Monetary Fund (IMF) warns the global economy is in a 'severe recession' and will decline by 1.3 percent this year. The IMF predicted a growth of 0.5 percent in January but by March it forecast a contraction of between 0.5 percent and 1 percent. "The global economy is in a severe recession inflicted by a massive financial crisis and acute loss of confidence," the IMF said in its semiannual World Economic Outlook (WEO) report. According to IMF, developed economies will see their gross domestic product (GDP) shrink at an annual rate of 3.8 percent this year while emerging economies will generate a weak growth of 1.6 percent. Japan's economy is expected to have the highest decline of 6.2 percent in 2009 while other major economies such as Germany, Italy, Britain, France and the US will see their economies shrink significantly, the IMF said. The fund predicted a slow recovery next year with growth to reemerge in 2010. However, the IMF said growth in 2010 would come entirely from emerging markets and developing countries, at a weak level of 1.9 percent, while the economies of developed countries are expected to stagnate. Economies in the Middle East will grow by 2.5 percent in 2009 and by 3.5 percent next year, the IMF said. The IMF warned on Tuesday that worldwide losses from the credit crunch could reach $4 trillion by the end of 2010.