As per the paper titled "IMF Background Paper on the Update of the Global and Regional Outlook" the world economy is slated to grow at a rate of 3.7% in the year 2008. This is the lowest estimated rate since 2002. The January projections for the world growth rate by IMF stood at 4.1 %. This has been the third estimated rate revision by IMF for the year 2008. Initially the International Monetary Fund had considerably played down fears of a US funds crunch for the global economy.
IMF has advised central banks to follow a flexible policy approach so as to easily adapt to the changing market situations. European Central Bank has been advised to decrease it's borrowing costs.
As per observations made by IMF the effects of the U.S. Subprime crisis of August 2007 has spilled over rapidly to affect the very core of the economic system. Markets in general and financial institutions in particular have been adversely affected by this crisis in the most unanticipated ways. The cumulative effects of these adverse changes on a highly interlinked global economy have surfaced in the form of a global slowdown or recession.
As per the IMF predictions the US economy is slated to grow at 0.5% in 2008. The initial estimates for 2008 made in January was 1.5%. For 2009 the rate of expansion for the US economy has been estimated at 0.6 % by IMF.
The growth estimate for the region under the Euro by IMF is 1.3 % for 2008. This was a scaling down from it's earlier January projection of 1.6 % for this region.
ECB's benchmark rate stands at 4%, the highest in the last 6 years. Inflation is hovering at 3.5%, which is well above the targeted 2%. Rate of inflation has been the highest as compared to the last 16 years.
Japan the second largest world economy is slated to grow at 1.4 % in this year as predicted by IMF. This was a scaling down from the January prediction of 1.5%. China's estimated rate of growth has been revised from 10% to 9.3% .
Asian Development Bank too has lowered its predictions for the Asian countries on 2nd April 2008. It advised the Asian central banks to implement policies for controlling inflation as opposed to that for spurring economic growth. The growth figure for Asia barring Japan has been revised by ADB to 7.6% from 8.2% estimated by it in September.
