IMF sees major slowdown for global economy. - The International Monetary Fund (IMF) is predicting a major slowdown for the global economy in 2009. It has sharply cuts its growth forecasts on the July figures to 3.0% growth for the global economy and 0.5% at most in advanced countries. The IMF's October 2008 World Economic Outlook (WEO) warns that 'the world economy is experiencing a major downturn in the face of the most dangerous financial shock in mature markets since the 1930s'. The IMF is forecasting a sharp fall in world growth in 2008, which is unlikely to recover until late 2009. In July 2008, the IMF was forecasting world growth of 3.9% in 2009 and 1.4% growth in the advanced world. Global growth is now forecast to fall from 5.0% a year in 2007 to 3.9% in 2008 and 3.0% in 2009 with growth in the advanced countries being close to zero until at least the middle of 2009. The IMF is predicting recession in the United States, where GDP is expected to rise by 1.6% in 2008 but only 0.1% in 2009, with two quarters of negative growth at the end of 2008 and the start of 2009. The eurozone is not expected to do much better, with growth of 1.3% in 2008 and 0.2% in 2009. For the big European economies, the IMF is forecasting that 2009 will see growth of close to zero in France, zero in Germany and negative in Spain, the United Kingdom and Italy. Business and consumer confidence indicators in the United States are close to the lowest levels experienced during the 2001-2002, explains the IMF, adding that the current situation is exceptionally uncertain and forecasts may still need to be reduced. Pressures on liquidity due to the shrinking use of debt may be longer and deeper than expected. Developing and emerging economies alone are driving world growth, with China in poll position (9.3%) but the IMF notes that the financial crisis is having an increasing impact on emerging markets. The 2009 growth forecasts for developing countries have been reduced from 6.7% a few months ago to 6.1%. The slowdown is expected to moderate inflation but price increases will remain at a high level. In advanced countries, inflation is forecast to fall from 3.6% in 2008 to 2.0% in 2009 and in developing countries from 9.4% in 2008 to 7.8% in 2009. The IMF says that several factors should lead to a gradual easing of the situation in the second half of 2009, namely 1) the use of commodities is expected to stabilise, though at the lowest level in 20 years; 2) the housing sector should hit bottom in 2009 and therefore cease its trend since 2006 of being a serious block on growth; and 3) notwithstanding cooling of their momentum, emerging economies are still expected to provide a source of resilience, benefitting from strong productivity growth and improved policy frameworks. The immediate political challenge is to stabilise the financial situation and improve the health of economies during a period of slow growth while keeping inflation under control, recommends the IMF. 'Policymakers around the world are facing the daunting task of stabilising financial conditions while nursing their economies through a period of slower growth and higher inflation,' explains the IMF, adding that the recovery measures include both financial and macroeconomic policies. Macroeconomic policies alone can only have a limited impact while the financial markets are undergoing such extreme pressure, notes the IMF, recommending measures to support economies in recession or on the brink of recession in order to break the vicious circle of the financial crisis impacting negatively on the real economy.