IMF sees global economy shrinking 1.3% in '09

The world economy is projected to contract by 1.3 per cent this year — the deepest recession since the Second World War, according to a new report from the International Monetary Fund.

"The downturn is truly global: output per capita is projected to decline in countries representing three-quarters of the global economy," the IMF said Wednesday in its latest World Economic Outlook.

"Growth is projected to re-emerge in 2010, but at 1.9 percent it would be sluggish relative to past recoveries," the IMF said.

The forecast for 2009 represents a weakening from the 0.5 per cent growth for this year that the IMF had projected back in January.

In its latest outlook, the IMF said Canada is projected to see economic contraction of 2.5 per cent this year, which is just slightly better than the 2.8 per cent drop projected for the U.S. economy.

Japan is expected to fare the worst among the major industrialized nations this year, with a contraction of 6.2 per cent.

The Chinese economy is expected to see growth of 6.5 per cent this year, although that still represents a slowdown from last year's nine per cent expansion. Likewise, the economy of India will slow to a growth rate of 4.5 per cent.

For 2010, the Washington, D.C.-based IMF said it sees the Canadian economy recovering modestly to grow by 1.2 per cent. The United States is expected to be flat with no growth forecast, while the outlook for the global economy sees an expansion of 1.9 per cent.