IMF Cuts Global Forecast on Worst Crisis Since 1930s

(excerpts)
April 2 (Bloomberg) -- The International Monetary Fund (IMF) cut its forecast for global
growth this year and said there's a 25 percent chance of a world recession, citing the
worst financial crisis in the U.S. since the Great Depression.

The greatest risk comes from the still-unfolding events in financial markets,
particularly the potential that deep losses on structured credits related to the U.S.
subprime mortgage market and other sectors would seriously impair financial-system
capital and initiate a global de-leveraging that would turn the current credit squeeze
into a full-blown credit crunch,'' the IMF statement said.

The IMF statement said world inflation will remain elevated in the first half of 2008.

The divergence between advanced and emerging economies is expected to continue, with
growth in advanced economies generally expected to fall well below potential,'' the IMF
document said.

"Growth in the U.S. and Europe is slowing sharply,'' the IMF document said. "`The ECB can
now afford some easing of the policy stance.''


TOO LATE?

Roger Nightingale, global strategist at Pointon York Ltd. in London, said the IMF had
been slow in spotting the slowdown.

"The IMF only really forecasts these things after they've begun,'' he told Bloomberg
Television. "You've got America, Italy and several other European countries and one or
two Asian countries, actually in or very close to recession, and yet the IMF just now
begins to talk about this phenomenon.''


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