Recession is looming, admits IMF

2 April 2008

The International
Monetary Fund today raised the spectre of outright global recession, blaming the
worst financial crisis in the US since the Great Depression.

In a hugely
pessimistic internal document, the IMF cuts its forecast for global economic
growth in 2008 from the 4.1% it predicted in January to just 3.7%.

'The financial shock
that originated in the US subprime mortgage market in
August 2007 has spread quickly, and in unanticipated ways, to inflict extensive
damage on markets and institutions at the core of the financial system,' the
report says. 'The global expansion is losing momentum in the face of what has
become the largest financial crisis in the US since the Great Depression.'

The paper, obtained
by Bloomberg News at an event for Asian ministers and central bankers in
Vietnam, said there was a 25% chance global growth would drop to 3% or less this
year and next - a pace the IMF described as equivalent to a global recession.