IMF says world economies in virtual stall

WASHINGTON, Jan. 28 (UPI) -- The International Monetary Fund in Washington said global economic growth would practically come to a standstill in 2009.

"We expect the global economy to come to a virtual halt," IMF Chief Economist Olivier Blanchard said.

Global economic growth was projected to drop to 0.5 percent this year, its slowest rate in 60 years, said a revision to the IMF World Economic Outlook released Wednesday.

"New policy initiatives are needed to produce credible loan loss recognition; sort financial companies according to their medium-run viability; and provide public support to viable institutions by injecting capital, and carving out bad assets," the report said.

The IMF said a "bad bank," which would serve as a repository for toxic assets, could "possibly" be used to relieve the global credit crisis.

"We think that more decisive action is needed now by both policymakers and market participants, and with greater emphasis on balance sheet cleansing," IMF Financial Counselor Jaime Caruana said.