IMF downgrades global outlook

WASHINGTON, March 18 (UPI) -- The International Monetary Fund plans to downgrade its assessment of the global economy, an adviser to the fund's managing director said.

Teresa Ter-Minassian, adviser to Dominique Strauss-Kahn, said the IMF expects the world economy to contract by 0.6 percent in 2009, a decline from October's prediction of 0.5 percent growth for the year, the Financial Times reported Wednesday.

"The scenario will be worse but the managing director has already said this," Ter-Minassian said. "This is a true global crisis, impacting all parts of the world and countries at different levels of development."

Contraction in the eurozone economy is expected to reach 3.2 percent, a downgrade from a previous prediction of a 2 percent contraction. The U.S. economy is expected to shrink by 2.6 percent, a full percentage point worse than the previous estimate of a 1.6 percent decline.

Japan's economy is expected to fall 5 percent, the largest decline among the world's major economies, the report said.

In its analysis, the IMF said Britain's economy would shrink 3.8 percent in 2009 and 0.2 percent in 2010.

Shadow Chancellor of the Exchequer George Osborne said the report was "further evidence that (Prime Minister) Gordon Brown's economic model is fundamentally broken," the Independent reported.