International Monetary Fund Managing Director Dominique Strauss-Kahn said prospects for the world economy aren't improving and indicated growth is unlikely to pick up in 2009.
``The forecasts we're going to release in a few days show things are not really improving,'' said Strauss-Kahn at a conference in Watford, England today. ``The downside risks identified six months ago have materialized.''
The Washington-based IMF, which publishes revised forecasts on April 9, now expects global growth of ``around 3.7 percent for next year,'' he said, one of the worst in the last two decades.
European finance ministers will press their counterparts from the Group of Seven major industrialized nations for greater coordination in battling the credit squeeze, according to the draft of a confidential report prepared for next week's meeting.
``We've got probably the first truly global financial crisis in the new era with what's happening in financial markets,'' Britain's Prime Minister Gordon Brown told the same conference.
The IMF has also cut its 2008 forecast to 3.7 percent, documents obtained by Bloomberg News this week showed, as a credit squeeze threatens to push the U.S. economy into a recession. That would be the slowest pace since 2002. The reduction was the third by the IMF since last July, when it predicted the world economy would grow 5.2 percent this year.
Chance of Recession
The IMF documents showed there's a 25 percent chance of a world recession because of the worst financial crisis since the Great Depression.
Strauss-Kahn said emerging economies will also be hurt by a global growth slowdown.
``The so-called decoupling in which emerging countries would be immune crisis appears to be misleading, he said. ``Emerging economies like China, India, Brazil do suffer from slowdown in rest of the world even if they sill have a high level of growth.''
Resolving the ``lack of confidence'' between financial institutions was the key to finding a solution to the current market turmoil, he said.
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