2009 would be an awful year: IMF Chief

WASHINGTON: Observing that the current economic crisis has hit every nook and corner of the world, the head of the International Monetary Fund on Thursday said 2009 is going to be an awful year for economies across the globe.

"2009 will almost certainly be an awful year... we expect global growth to enter deeply into a negative territory," IMF Managing Director Dominique Strauss-Kahn told reporters in his address to the National Press Club here.

The crisis, which originated in advanced economies and spread like wildfire across the world, Strauss-Kahn said, is now a truly global crisis and nobody is escaping.

"Emerging markets are being hit hard, facing the double punch of a sharp drop in export demand and a sudden stop in capital inflows, and this threatens to undo the impressive gains in growth and convergence achieved over the past decade or so," he said.

"Of possibly even greater concern, the crisis has also arrived on the shores of low-income countries, and threatens to cast millions back into poverty - the human consequences here could be absolutely devastating," the IMF boss observed.

Strauss-Kahn said the free-fall in the global economy may be starting to abate, with a recovery emerging in 2010. But this depends crucially on the right policies being adopted today, he argued. "Of course, the solutions differ by country, but there must be a coherent and coordinated response by the international community," he said.

Reiterating his call for a global economic stimulus, Strauss-Kahn said he is impressed by the degree of international coordination-many countries. "This cooperation was unprecedented. But efforts need to be sustained in 2010, because we are not out of the woods just yet," he argued.

Praising the decisions taken by G-20 leaders at the London Summit meeting early this month, he termed it as a big success. It "may well mark a turning point on this crisis," he said and stressed on the need for a stronger global coordination in macroeconomic and financial sector policymaking.

"We saw the costs of non-cooperation when countries protected domestic banking systems at the expense of neighbours and ring-fenced assets in their own jurisdictions-and, looking ahead, we must avoid pressure on banks to favor domestic lending. I am pleased to say that coordination is improving, and the IMF is playing a key role in the multilateral approach to financing and surveillance," he said.